PHILIPPINE  ISLANDS 


CUM£NT8 
DtPt. 


INTERNAL  REVENUE  LAWS 

OF  THE 

PHILIPPINE  ISLANDS 

In  Force  and  Effect 
July  1,  1921 

COMPRISING 

INTERNAL  REVE~  .IE  LAW— Chapter  40,  Administrative  Code, 
1917,  Sections  1420  to  1601,  as  amended 

OFFENSES  AGAINST  INTERNAL  REVENUE  LAW— Chapter  66, 
Administrative  Code,  1917,  Sections  2714  to  2741,  as  amended 

INTERNAL  REVENUE  ALLOTMENT  LAW— Chapter  19,  Admin- 
istrative Code,  1917,  Sections  484  to  497,  as  amended 

INCOME  TAX  LAW— Act  No.  2833,  as  amended 

TOBACCO  INSPECTION  LAW— Act  No.  2613,  as  amended 


Compiled  in  the 

Bureau  of  Insular  Affairs 

War  Department 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 
1921 


GIFT  OF 


DOCUMENTS 

DEPT, 


PHILIPPINE  ISLANDS 


INTERNAL  REVENUE  LAWS 


OF  THE 


PHILIPPINE  ISLANDS 

In  Force  and  Effect 
July  1,  1921 


COMPRISING 

INTERNAL    REVENUE   LAW— Chapter  40,  Administrative  Code, 
1917,  Sections  1420  to  1601,  as  amended 

OFFENSES  AGAINST  INTERNAL  REVENUE  LAW— Chapter  66, 
Administrative  Code,  1917,  Sections  2714  to  2741,  as  amended 

INTERNAL  REVENUE  ALLOTMENT  LAW— Chapter  19,  Admin- 
istrative Code,  1917,  Sections  484  to  497,  as  amended  , 

INCOME  TAX  LAW— Act  No.  2833,  as  amended 
TOBACCO  INSPECTION  LAW-Act  No.  2613,  as  amended 


Compiled  in  the 
Bureau  of  Insular  Affairs 
War  Department 


WASHINGTON 

GOVERNMENT  PRINTING  OFFICE 
1921 


A  JT«T 


J)OCUM£NT* 
DEFI. 


CONTENTS. 


Page. 

Internal  Revenue  Law 3 

Ratification  of  Internal  Revenue  Taxes  by  acts  of  Congress 05 

Offenses  against  Internal  Revenue  Laws 67 

Internal  Revenue  Allotment  Law 79 

Income  Tax  Law +. ; 85 

Tobacco   Inspection  Law '. 113 


INTERNAL  REVENUE  LAW. 


[From  Administrative  Code,  1917.] 
Chapter  40.— BUREAU  OF  INTERNAL  REVENUE. 

PRELIMINARY  ARTICLE. — Title  of  chapter. 
SEC.  1420.  Title  of  chapter. 

ARTICLE  I. — Organization   of  Bureau. 

SEC.  1421.  (Chief  officials  of  Bureau  of  Internal  Revenue. 

SEC.  1422.  City  assessor  and  collector  of  Manila. 

SEC.  1428.  Powers  and  duties  of  Bureau. 

SEC.  1424.  Specific  provisions  to  be  contained  in  regulations. 

SEC.  1425.  Forms,    certificates,    and    appliances    supplied    by    the    Collector    of 

Internal  Revenue. 

SEC.  1420.  A  fronts  and  deputies  for  collection  of  internal  revenue. 
SEC.  1427.  Expenses  of  collection  to  be  borne  by  provinces. 
SEC.  1428.  Internal-revenue  inspection  districts. 
SEC.  1429.  Duties  of  internal-revenue  agents. 
SEC.  1480.  Authority  of  agent's  assistant. 
SEC.  1431.  Assignment  of  storekeepers  to  warehouses. 
SEC.  1432.  Assignment  of  internal-revenue  agents  to  special  duties. 
SEC.  1433.  Reports  of  violations  of  law. 

SEC-.  1434.  Authority  of  internal-revenue  officers  to  make  arrests  and  seizures. 
SEC.  1435.  Power  of  Collector  of  Internal  Revenue  in  making  assessments. 
SEC.  1436.  Authority  of  officers  to  administer  oaths  and  take  testimony. 
SEC.  1437.  Contents  of  Collector's  annual  report. 

ARTICLE  II. — Sources  of  internal  revenue. 
SEC.  1438.  Sources  of  taxes. 

ARTICLE  III. — Cedula  tax. 

SEC.  1439.  Person  liable  to  cedula  tax. 

SEC.  1440.  Amount  of  the  cedula  tax. 

SEC.  1441.  Increase  of  tax  in  case  of  delinquency. 

SKC.  1442.  Payment  of  arrearages. 

SEC.  1443.  Time  for  payment  of  cedula  tax — When  delinquency  occurs. 

SEC.  1444.  Extension  of  time  for  payment  of  cedula  tax. 

SEC.  1445.  Remission  of  tax  in  Department  of  Mindanao  and  Sulu. 

SEC.  1440.  Payment  of  cedula  tax  in  province  other  than  that  of  domicile. 

SEC.  1447.  Presentation  of  cedula  certificate  upon  certain  occasions. 

SEC.  1448.  Secondary  certificate  in  lieu  of  destroyed  cedula  certificate. 


/f\  '  4    M 


1946 


'  *4  INTERNAL   REVENUE   LAWS. 

"'  *  "'*     ••»•»»*»  '  ARTICLE  IV. — Documentary  stump  ia.v. 

SEC.  1449.  Stamp  tax  upon  documents  and  papers. 

SEC.  1450.  Documents  and  papers  not  subject  to  stamp  tax. 

SEC.  1451.  Payment  of  documentary  stamp  tax — Cancellation  of  stamp. 

SEC.  1452.  Effect  of  failure  to  stamp  taxable  document. 

ARTICLE  V. — Privilege  taxes. 

SEC.  1453.  Privilege  taxes  on  business  and  occupation. 

SEC.  1454.  Legality  of  business  as  affected  by  payment  of  tax. 

SEC.  1455.  Time  for  payment  of  fixed  taxes. 

SEC.  1456.  Reckoning  tax  for  business  first  begun  or  abandoned  during  year. 

SEC.  1457.  Fixed  tax  upon  business  subject  to  percentage  tax. 

SEC.  1458.  Payment  of  percentage  taxes — Quarterly  report  of  earnings. 

SEC.  1459.  Percentage  tax  on  merchant's  sales. 

SEC.  1460.  Sales  not  subject  to  merchant's  tax. 

SEC.  1461.  Percentage  tax  on  printers,  publishers,  and  lithographers. 

NEC.  1462.  Percentage  tax  on  contractors,  warehousemen,  and  others. 

SEC.  1463.  Percentage  tax  on  carriers  and  keepers  of  •stables  and  garages. 

SEC.  1464.  Amount  of  tax  on  business. 

SEC.  1465.  Words  and  phrases  defined. 

SEC.  1466.  Percentage  tax  on  stock,  real  estate,  and  commercial  brokers. 

SEC.  1467.  Increase  of  tax  on  cockpits. 

SEC.  1468.  Reduction  of  tax  on  race  tracks. 

SEC.  1469.  Privilege  secured  by  payment  of  tax. 

SEC.  1470.  Continuation  of  business  of  deceased  person. 

SEC.  1471.  Removal  of  business  to  other  location. 

Six  .  1472.  Revocation  of  privilege. 

SEC.  1473.  Amount  of  privilege  tax  on  occupation. 

Six.  1474.  Exemption  of  persons  employed  by  Government  or  engaged  in  work 

of  charity. 

SEC.  1475.  Privilege  tax  on  signs,  signboards,  and  billboards. 
SEC.  1476.  Removal  of  sign  by  Government. 
SEC.  1477.  Restrictive  provisions. 

ARTICLE  VI. — Specific  taxes. 

SEC.  1478.  Articles  subject  to  specific  tax. 

SEC.  1479.  Payment  of  specific  tax  on  domestic  products. 

SEC.  1480.  Payment  of  specific  tax  on  imported  articles. 

SEC.  1481.  Specific  tax  on  distilled  spirits. 

SEC.  1482.  Mode  of  computing  contents  of  cask  or  package. 

SEC.  1483.  Tax  on  preparations  containing  distilled  spirits  as  chief  ingredient. 

SEC.  1484.  Exemption  in  favor  of  domestic  denatured  alcohol. 

SEC.  1485.  Removal  of  spirits  or  cigars  under  bond. 

SEC.  1486.  Specific  tax  on  wines. 

SEC.  1487.  Specific  tax  on  fermented  liquors. 

S  KO.  1488.  Removal  of  fermented  liquors  to  bonded  wn rehouse. 

SEC.  1489.  Removal  of  damaged  liquors  free  of  tax. 

SEC'.  1490.  Specific  tax  on  products  of  tobacco. 

SEC.  1491.  Removal  of  tobacco  products  without  prepayment  of  taxes. 

SEC.  1492.  Specific  tax  on  cigars  and  cigarettes. 

SEC.  1493.  Specific  tax  on  matches. 


INTERNAL   REVENUE   LAWS. 

1494.  Tax  on  skimmed  milk. 
SEC.  1495.  Specific  tax  on  manufactured  oils. 
SEC.  1496.  Tax  on  coal. 
SEC.  1497.  Tax  on  cinematographic  films. 

1498.  Tax  on  playing  cards. 


:- 


CLE  VII. — Taxes  on  resources  of  banks,  receipts  of  insurance  coinp(i-i:icx, 
and  receipts  of  corporations  paying  franchise  tax. 

SEC.  1499.  Tax  on  capital,  deposits,  and  circulation  of  banks. 

SEC.  1500.  Time  for  payment  of  tax — Increase  of  tax  in  case  of  delinquency. 

SEC.  1501.  Banker's  semiannual  report  of  business  done. 

SEC.  1502.  Computing  resources  of  bank  incorporated  abroad. 

SEC.  1503.  Exemption  of  savings  institutions. 

SEC.  1504.  Exemption  in  case  of  reduced  circulation. 

SEC.  1505.  Tax  on  insurance  premiums. 

SEC.  1506.  Time  for  payment  of  tax — Increase  of  tax  in  case  of  delinquency. 

SEC.  1507.  Yearly  report  from  insurance  company. 

SEC.  1508.  Tax  on  corporate  franchises. 

ARTICLE  VIII. — Charges  for  forest  products. 

SEC.  1509.  Measuring  of  forest  products  and  collection  of  charges  thereon. 

SEC.  1510.  Mode  of  measuring  timber. 

SEC.  1511.  Charges  for  timber  cut  in  public  forests. 

SEC.  1512.  Charges  for  firewood  cut  in  public  forests. 

SEC.  1513.  Charges  collectible  for  wood  cut  from  unregistered  private  lands. 

SEC.  1514.  Surcharge  for  illegal  cutting  and  removal  of  forest  products  or  for 

delinquency. 

SEC.  1515.  Charge  for  timber  cut  for  use  on  mining  claim. 
SKC.  1516.  Charges  for  gums,  resins,  and  other  forest  products. 
SEC.  1517.  Charges  for  stone,  earth,  salt,  and  guano  taken  from  lands  under 

the  jurisdiction  of  the  Bureau  of  Forestry. 

SEC.  151S.  No  charge  for  products  lawfully  removed  under  gratuitous  license. 
SEC.  1519.  Gratuitous  licensees  subject  to  regulations  of  Bureau  of  Internal 

Revenue.    x 
SEC.  1520.  Time  for  payment  of  forest  charges. 

ARTICLE  IX. — Testing  and  sealing  of  weights  and  measures. 

SEC.  1521.  Sealing  and  licensing  of  weights  and  measures. 

SEC.  1522.  Fees  for  sealing  linear  metric  measures. 

SEC.  1523.  Fees  for  sealing  English  linear  measures. 

SEC.  1524.  Fees  for  sealing  metric  measures  of  capacity. 

SEC.  1525.  Fees  for  sealing  metric  instruments  of  weight. 

SEC.  1526.  Form  and  duration  of  license  for  use  of  weights  and  measures. 

SEC.  1527.  Secondary    standards   preserved   by   provincial    treasurers — Testing 

of  same. 

SEC.  1528.  Comparison  of  secondary  and  fundamental  standards. 
SEC.  1529.  Inspectors  of  weights  and  measures. 
SEC.  1530.  Sealers  of  weights  and  measures. 

SEC.  1531.  Destruction  of  defective  instrument  of  weight  or  measure. 
SEC.  1532.  Testing  of  instruments  used  in  Government  work. 
SEC.  1533.  Dealer's  permit  to  keep  unsealed  weights  and  measures. 


6  INTERNAL   REVENUE   LAWS. 

ARTICLE  X. — .if?  valorem    ta.r  on   output  of  mines. 

SEC.  1534.  Rate  and  basis  of  tax  on  mines. 
SEC.  1535.  Time  and  manner  of  collection. 

ARTICLE  XI. — Tax  on  inheritance,  legacies  and  other  acquisition*  mortis  causa. 

SEC.  1536.  Conditions  and  rates  of  taxation. 

SEC.  1537.  Payment  of  tax  antecedent  to  the  transfer  of  shares,  bonds  or  rights. 

SEC.  1538.  Exemption  in  favor  of  surviving  spouse  and  children. 

SEC.  1539.  Deductions  to  be  made  in  determining  net  taxable  amount. 

SEC.  1540.  Additions  of  gifts  and  advances. 

SEC.  1541.  Rule  of  taxation  when  beneficiaries  belong  to  different  classes. 

SEC.  1542.  Determination  of  value  of  usufructs,  annuities,  and  real  property. 

SEC.  1543.  Exemption  of  certain  acquisitions  and  transmissions. 

SEC.  1544.  When  tax  to  be  paid. 

SEC.  1545.  Beneficiary  to  be  charged  with  tax  on  his  corresponding  portion. 

SEC.  1546.  Payment  before  delivery  by  executor  or  administrator. 

SEC.  1547.  Payment  of  tax  antecedent  to  registration  of  documents. 

SEC.  1548.  Restitution  of  tax  upon  satisfaction  of  outstanding  obligation. 

ARTICLE  XII. — Administrative  provision*  relative  to  persons  and  establishments 
•  subject  to  privilege  taxes. 

SEC.  1549.  Registration  of  name  or  style  with  provincial  treasurer. 

SEC.  1550.  Sign  to  be  exhibited  by  distiller  or  rectifier. 

SEC.  1551.  Sign  to  be  exhibited  by  manufacturer  of  products  of  tobacco. 

SEC.  1552.  Exhibition  of  certificate  of  payment  at  place  of  business. 

ARTICLE  XIII. — Adniinixtra-ti-rc  pro  ris  ions  reyulathnj  lriisihexn  of  ]>crsous  deal- 
inn  in  article*  subject  to  sited  fie  ta.r. 

SEC.  1553.  Extent  of  supervision  over  establishments  producing  taxable  output. 

SEC.  1554.  Records  to  be  kept  by  manufacturers — Assessments  based  thereon. 

SEC.  1555.  Premises  subject  to  approval  by  collector. 

SEC.  1556.  Labels  and  form  of  packages  prescribed  by  collector. 

SEC.  1557.  Removal  of  articles  after  payment  of  tax. 

SEC.  1558.  Storage  of  goods  in  internal-revenue  bonded  warehouse. 

SEC.  1559.  Proof  of  exportation — Exporter's  bond. 

SEC.  1560.  Manufacturers'  and  importers'  bonds. 

SEC.  1501.  Records  to  be  kept  by  wholesale  dealers. 

Six1,  inoii.  Records  to  be  kept  by  dealers  in  leaf  tobacco. 

SEC.  15(53.  Preservation  <>f  invoices  and  stamps. 

SKC.  1564.  Information  to  be  given  by  manufacturers  of  distilling  apparatus. 

SKC.  15(55.  Establishment  of  distillery  warehouses. 

SEC.  1566.  Custody  of  distillery  warehouse. 

SKC.  1567.  Limitation  on  quantity  of  spirits  removed  from  warehouse. 

SEC.  1568.  Requirement  incident  to  process  of  denaturing  alcohol. 

SFC.  1569.  Recovery  of  alcohol  for  use  in  arts  and  industries. 

SKC.  1570.  Supervision  over  rectification  and  compounding  of  liquors. 

SEC.  1571.  Authority  of  officer  in  searching  for  taxable  articles. 

SEC.  1572.  Detention  of  package  containing  taxable  articles. 

SKC-.  1573.  Inscription  to  be  placed  on  skimmed  milk. 


SEC 


INTERNAL   REVENUE   LAWS.  •  7 

ARTICLE  XIV. — Administrative  provisions  relative  to  prohibited  drugs. 

?.  1574.  Words  and  phrases  defined. 

SEC.  1575.  Lawful  possession  and  uses  of  prohibited  drugs  specified. 

SEC.  1576.  Importation  of  opium — Storage  of  same. 

SEC.  1577.  Record  to  be  kept  by  pharmacists — Inspection  of  same. 

ARTICLE  XV. — Remedies  in  general. 

SKC.  1578.  Injunction  not  available  to  restrain  collection  of  tax. 
SKC.  1579.  Recovery  of  tax  paid  under  protest. 
SEC.  1580.  Action  to  contest  forfeiture  of  chattel. 

.1581.  Form    and    nvode   of   proceeding   in   actions   arising  under   internal 
revenue  law. 

.  1582.  Authority  of  collector  to  make  compromises  and  to  refund  taxes. 
SKC.  15S.'}.  Satisfaction  of  judgment  recovered  against  treasurer  or  other  officer. 
SEC.  1 584.  Remedy  for  enforcement  of  statutory  penal  provisions. 
SEC.  1585.  Remedy  for  enforcement  for  forfeitures. 
Sn\  1580.  When  property  to  be  sold  or  destroyed. 

SKC.  1587.  Disposition  of  funds  recovered  in  legal  proceedings  or  obtained  from 
forfeitures. 

ARTICLE  XVI. — Civil  remedies  for  collection  of  taxes. 

SEC.  1588.  Nature  and  extent  of  tax  lien. 

SEC.  1589.  Civil  remedies  for  collection  of  delinquent  taxes. 

SEC.  1590.  Distraint  of  personal  property. 

SEC.  1591.  Mode  of  procedure  and  disposition  of  proceeds. 

SEC.  1592.  Release  of  distrained  property  upon  payment  prior  to  sale. 

SEC.  1593.  Report  of  sale  to  Bureau  of  Internal  Revenue. 

SEC.  1594.  Purchase  by  Government  at  sale  upon  distraint. 

SEC.  1595.  Levy  on  real  estate  after  exhaustion  of  personality. 

SEC.  1596.  Advertisement  and  sale. 

SEC.  1597.  Redemption  by  delinquent. 

SEC.  1598.  Final  deed  to  purchaser. 

SEC.  1599.  Forfeiture  to  Government  for  want  of  bidder. 

SEC.  1600.  Resale  of  real  estate  taken  for  taxes. 

SEC.  1601.  Further  distraint  or  levy. 

PRELIMINARY  ARTICLE. — TITLE  or  CHAPTER. 

SEC.  1420.  Title  of  chapter. — This  chapter  shall  be  known  as  the 
Internal  Revenue  Law. 
[2657—1575.] 

ARTICLE  I. — ORGANIZATION  OF  BUREAU. 

SEC.  1421.  Chief  officials  of  Bureau  of  Internal  Revenue. — The 
Bureau  of  Internal  Revenue  shall  have  one  chief  and  one  assistant 
chief  to  be  known,  respectively,  as  the  collector  of  internal  revenue 
and  the  deputy  collector  of  internal  revenue. 

[2657—1576.] 

SEC.  1422.  City  assessor  and  collector  of  Manila. — The  collector  of 
internal  revenue  shall  be  ex  officio  city  assessor  and  collector  of 


8  INTERNAL   REVENUE   LAWS. 

Manila  and  as  such  shall  collect  all  its  municipal  revenues,  and  shall 
perform  in  and  for  said  city  the  duties  imposed  by  this  law  on  pro- 
vincial treasurers  generally. 

[2657—1577.] 

SEC.  1423.  Powers  and  duties  of  bureau. — The  powers  and  duties  of 
the  Bureau  of  Internal  Revenue  shall  comprehend  the  collection  of 
all  internal-revenue  taxes,  fees,  and  charges,  and  the  enforcement 
according  to  law  of  all  forfeitures,  penalties,  and  fines  connected 
therewith.  Said  bureau  shall  also  give  effect  to  and  administer  the 
supervisory  and  police  powers  conferred  by  this  chapter  or  other 
law  or  parts  of  laws  within  its  jurisdiction. 

[2657—1578.] 

SEC.  1424.  (As  amended  by  act  No.  2819;  sec.  28,  act  No.  2833;  and 
sec.  1,  act  No.  2835.)  Specific  provisions  to  l>e  contained  in  regula- 
tions.— The  regulations  of  the  Bureau  of  Internal  Revenue  shall, 
among  other  things,  contain  provisions  specifying,  prescribing,  or 
defining — 

(a)  The  time  and  manner  in  which  provincial  treasurers  shall  can- 
vass their  provinces  for  the  purpose  of  discovering  persons  and  prop- 
erty liable  to  internal-revenue  taxes,  and  the  manner  in  which  their 
lists  and  records  of  taxable  persons  and  taxable  objects  shall  be 
made  and  kept. 

(b)  The  forms  of  labels,  brands,  or  marks  to  be  required  on  goods 
subject  to  a  specific  tax  and  the  manner  in  which  the  labeling,  brand- 
ing, or  marking  shall  be  effected. 

(c)  The  conditions  under  which  and  the  manner  in  which  goods 
intended  for  export,  which  if  not  exported  would  be  subject  to  a 
specific  tax,  shall  be  labeled,  branded,  or  marked. 

(d)  The  conditions  to  be  observed  by  revenue  officers,  provincial 
fiscals,  and  other  officials  respecting  the  institution  and  conduct  of 
legal  actions  and  proceedings. 

(e)  The  manner  in  which  persons  authorized  to  have  and  keep 
prohibited  drugs  shall  keep  their  records  relating  to  the  same. 

(/)  The  conditions  under  which  opium  may  be  imported,  the  man- 
ner of  its  storage  and  removal  for  use,  as  well  as  the  manner  in  which 
the  same  shall  be  marked  or  labeled  prior  to  removal. 

(g)  The  conditions  under  which  prohibited  drugs  may  be  trans- 
ferred from  the  possession  of  persons  authorized  to  have  and  keep 
the  same  to  the  possession  of  other  persons  similarly  authorized. 

(7t.)  The  conditions  under  which  -goods  intended  for  storage  in 
bonded  warehouses  shall  be  conveyed  thither,  their  manner  of  stor- 
age, and  the  method  of  keeping  the  entries  and  records  in  connection 
therewith ;  also  the  books  to  be  kept  by  storekeepers  and  the  'reports 


INTERNAL   REVENUE   LAWS. 

to  be  made  by  them  in  connection  with  their  supervision  of  such 
houses. 

(i)  The  conditions  under  which  alcohol  intended  for  use  in  the 
arts  and  industries  may  be  removed  and  dealt  in,  the  character  and 
quantity  of  the  denaturing  material  to  be  used,  the  manner  in  which 
the  process  of  denaturing  shall  be  effected,  the  bonds  to  be  given, 
the  books  and  records  to  be  kept,  the  entries  to  be  made  therein,  the 
reports  to  be  made  to  the  collector  of  internal  revenue,  and  the 
signs  to  be  displayed  in  the  business  or  by  the  person  for  whom  such 
denaturing  is  done  or  by  whom  such  alcohol  is  dealt  in. 

(j)  The  manner  in  which  revenue  shall  be  collected  and  paid,  the 
instrument,  document,  or  object  to  which  revenue  stamps  shall  be 
affixed,  the  mode  of  cancellation  of  the  same,  the  manner  in  which 
the  proper  books,  records,  invoices,  and  other  papers  shall  be  kept 
and  entries  therein  made  by  the  person  subject  to  tjie  tax,  as  well  as 
the  manner  in  which  licenses  and  stamps  shall  be  gathered  up  and 
returned  after  serving  their  purpose. 

(k)    (Repealed  by  sec.  1  of  act  2819.) 

(I)  The  conditions  to  be  observed  by  revenue  officers,  provincial 
fiscals,  and  other  officials  respecting  the  enforcement  of  Article  XI 
imposing  a  tax  on  inheritances,  legacies,  and  other  acquisitions  mortis 
causa  and  such  other  rules  and  prohibition  which  the  collector  of 
internal  revenue  may  consider  suitable  for  the  enforcement  of  the 
said  Article  XI. 

(m)  The  manner  in  which  income-tax  returns,  information,  and 
reports  shall  be  prepared  and  reported  and  the  tax  collected  and 
paid,  as  well  as  the  conditions  under  which  evidence  of  payment  shall 
be  furnished  the  taxpayer,  and  the  preparation  and  publication  of 
income-tax  statistics. 

[2657—1579.] 

SEC.  1425.  Forms,  certificates,  and  appliances  supplied  ~by  the  col- 
lector of  internal  revenue. — It  shall  be  the  duty  of  the  collector  of 
internal  revenue,  among  other  things,  to  prescribe,  provide,  and  dis- 
tribute to  the  proper  officials  the  requisite  licenses,  cedula  forms,  in- 
ternal-revenue stamps,  and  labels  or  tags  used  in  sealing  weights  and 
measures,  and  all  other  forms,  certificates,  bonds,  records,  invoice 
books,  instruments,  appliances  and  apparatus  used  in  administering 
the  laws  under  the  jurisdiction  of  the  bureau. 

[2657—1580.] 

SEC.  1426.  Agents  and  deputies  for  collection  of  internal  revenue. — 
For  the  collection  of  the  internal  revenue  on  imported  articles  the 
insular  collector  of  customs  and  his  subordinates  are  constituted 
agents  of  the  collector  of  internal  revenue;  and  the  provincial  treas- 


10  INTERNAL   REVENUE   LAWS. 

urers,  their  deputies,  and  employees  shall  be  his  deputies  for  the  col- 
lection of  other  internal  revenue  and  the  enforcement  of  all  laws 
within  the  jurisdiction  of  the  bureau. 

For  economy  or  effectiveness  in  the  collection  of  the  cedula  tax, 
the  collector  of  internal  revenue  may  authorize  the  provincial  treas- 
urer of  any  province  to  appoint,  for  the  first  four  months  of  the 
year  only,  special  deputies  to  collect  such  tax,  at  a  rate  of  compen- 
sation not  greater  than  ten  centavos  for  each  tax  collected  and  cer- 

C? 

tificate  issued. 

The  treasurer  of  the  Department  of  Mindanao  and  Sulu  may  ap- 
point such  special  deputies  as  he  may  deem  necessary  for  the  col- 
lection and  execution  of  the  payment  of  the  cedula  tax  in  each 
province  of  the  department,  and  pay  to  the  persons  so  appointed, 
including  persons  otherwise  compensated  by  the  Government,  a 
commission  of  not  to  exceed  10  per  centum  on  the  money  collected 
by  each,  which  commission  shall  be  stated  in  his  appointment. 

[2657—1581.] 

SEC.  1427.  Expenses  of  collection  to  be  borne  by  provinces. — The 
expenses  incurred  by  the  provincial  and  municipal  authorities  in 
collecting  taxes  and  in  enforcing  the  laws  under  the  jurisdiction 
of  the  Bureau  of  Internal  Revenue,  including  expenses  incurred  in 
appearing  in  the  courts  in  internal-revenue  cases,  shall  be  borne  by 
the  respective  provinces ;  but  the  city  of  Manila  shall  be  liable  only 
for  such  expenses  as  are  incident  to  the  collection  of  internal-revenue 
and  other  taxes  in  and  for  that  city,  and  for  such  expenses  the  In- 
sular Government  shall  be  reimbursed. 

[2657—1582.] 

SEC.  1428.  Internal-revenue  inspection  districts. — With  the  ap- 
proval of  the  department  head,  the  collector  of  internal  revenue 
shall  divide  the  Philippine  Islands  into  such  number  of  inspection 
districts  as  may  from  time  to  time  be  required  for  administrative 
purposes.  Each  of  these  districts  shall  be  in  charge  of  an  internal- 
revenue  agent. 

[2657—1583.] 

SEC.  1429.  Duties  'of  internal-revenue  agents. — It  shall  be  the 
duty  of  every  internal-revenue  agent  to  see  that  all  laws  and  regula- 
tions relative  to  the  collection  of  internal-revenue  taxes  are  faith- 
fully executed  and  complied  with,  to  aid  in  the  prevention,  detection, 
and  punishment  of  any  frauds  or  delinquencies  in  connection  there- 
with, and  to  examine  into  the  efficiency  of  all  officers  and  employees 
of  the  Bureau  of  Internal  Revenue.  He  shall  report  in  writing  to 
the  collector  of  internal  revenue  any  neglect  of  duty,  incompetency, 
delinquency,  or  malfeasance  in  office  of  any  internal-revenue  officer 
of  which  he  may  obtain  knowledge,  with  a  statement  of  all  the  facts 
in  each  case  and  any  evidence  sustaining  the  same.  He  may,  by 


INTERNAL,   REVENUE   LAWS.  11 

:ice  in  writing,  suspend  from  duty  any  storekeeper,  and  in  such 
case  he  shall  immediately  notify  the  collector  of  internal  revenue  and 
within  three  days  thereafter  report  his  action  an$  his  reasons  there- 
for in  writing  to  said  collector. 

Should  any  revenue  agent  discover  any  neglect,  incompetency, 
delinquency,  or  malfeasance  of  any  provincial  treasurer  in  the  per- 
formance of  his  duty  as  a  collector  of  internal  revenue,  he  shall  im- 
mediately report  the  facts  to  the  collector  of  internal  revenue  In 
writing. 

[2657—1584.] 

SEC.  14:30.  Authority  of  agent's  assistant. — An  agent's  assistant 
in  any  district  may,  in  the  name  of  the  internal-revenue  agent  in 
charge  of  such  district  and  under  the  control  of  such  officer  as  his 
principal,  exercise  any  power  or  perform  any  act  which  might  be 
exercised  or  performed  by  such  internal-revenue  agent  himself. 

[2657—1585.] 

SEC.  1431.  Assignment  of  storekeepers  to  warehouses. — The  col- 
lector of  internal  revenue  shall  employ  and  assign  to  such  bonded 
warehouses  and  manufacturers'  warehouses  as  lie  shall  deem  ex- 
pedient internal-revenue  storekeepers. 

[2657—1586.] 

SEC.  1432.  Assignment  of  internal-revenue  agents  to  special 
duties. — Internal-revenue  agents  may  be  assigned  to  duty  under  the 
direction  of  any  officer  of  the  Bureau  of  Internal  Revenue  and  may 
be  assigned  to  special  duties  other  than  those  of  internal-revenue 
agent  proper. 

Any  officer  'or  employee  of  the  bureau  may  be  assigned  to  the 
duties  of  revenue  agent  without  change  of  his  official  character  or 
salary. 

[2657—1587.] 

SEC.  1433.  Reports  of  violations  of  law. — When  a  provincial  or 
deputy  provincial  treasurer  or  an  internal-revenue  agent  discovers 
evidence  of  the  violation  of  any  law  administered  by  the  Bureau 
of  Internal  Revenue  of  such  character  that  a  criminal  prosecution 
ought  to  be  instituted,  he  shall  immediately  report  the  facts  to  the 
fiscal  of  the  province,  giving  the  name  of  the  offender  and  the  names 
of  the  witnesses,  if  possible.  A  duplicate  of  such  report  shall  be 
sent  to  the  collector  of  internal  revenue. 

It  shall  also  be  the  duty  of  officers  and  employees  of  the  Bureau 
of  Internal  Revenue  to  report  to  the  Bureau  of  Forestry  any  viola- 
tions of  the  forest  law  within  their  knowledge.  A  duplicate  of 
each  such  report  shall  be  furnished  to  the  collector  of  internal 
revenue. 

[2657—1587.] 


12  INTERNAL    REVENUE   LAWS. 

SEC.  1434.  Authority  of  internal-revenue  officers  to  make  arrest* 
and  seizures. — The  collector  of  internal  revenue,  the  deputy  collector  of 
internal  revenue,  internal-revenue  agents,  and  provincial  treasurers 
and  their  deputies  shall  have  authority  to  make  arrests  and  seizures 
for  the  violation  of  any  penal  law  or  regulation  administered  by  the 
Bureau  of  Internal  Revenue.  Any  person  so  arrested  shall  be  forth- 
with carried  before  a  magistrate,  there  to  be  dealt  with  according 
to  law. 

[2657—1589.] 

SEC.  1435.  (As  amended  by  act  No.  2892.)  Power  of  collector  of  in- 
ternal revenue  in  making  assessments. — When  a  report  required  by 
law  as  a  basis  for  the  assessment  of  any  tax  shall  not  be  forthcoming 
within  the  time  fixed  by  law  or  regulation,  or  when  there  is  reason 
to  believe  that  any  such  report  is  false,  incomplete,  or  erroneous,  the 
collector  of  internal  revenue  shall  assess  the  proper  tax  on  the  best 
evidence  obtainable. 

"When  it  shall  come  to  the  knowledge  of  the  collector  of  internal 
revenue  that  a  taxpayer  is  retiring  from  the  business  subject  to  taxa- 
tion, or  intends  to  leave  the  Philippine  Islands,  or  remove  his  prop- 
erty therefrom,  or  hide  or  conceal  his  property,  or  perform  any  act 
tending  to  obstruct  the  proceedings  for  collecting  the  tax  for  the  past 
or  current  quarter  or  year  or  render  the  same  totally  or  partly  in- 
efficient, unless  such  proceedings  are  begun  immediately,  the  collector 
of  internal  revenue  shall  declare  the  tax  period  of  such  taxpayer  due 
at  any  time  and  shall  send  the  taxpayer  a  notice  of  such  decision,  to- 
gether with  a  request  for  the  immediate  payment  of  the  tax  for  the 
tax  period  so  declared  due  and  the  tax  for  the  preceding  year  or  quar- 
ter, or  such  portion  thereof  as  may  be  unpaid,  and  said  taxes  shall  be 
due  and  payable  immediately  and  shall  be  subject  to  all  the  penalties 
hereafter  prescribed,  unless  paid  within  the  time  fixed  in  the  request 
of  the  collector  of  internal  revenue." 

[2657—1590.] 

SEC.  1436.  Authority  of  officers  to  administer  oaths  and  take  testi- 
mony.— The  collector  of  internal  revenue,  the  deputy  collector  of  in- 
ternal revenue,  special  deputies  of  the  collector,  internal-revenue 
agents,  provincial  treasurers  and  their  deputies,  and  any  other  em- 
ployee of  the  bureau  thereunto  especially  deputed  by  the  collector 
shall  have  power  to  administer  oaths  and  to  take  testimony  in  any 
official  matter  or  investigation  conducted  by  them  touching  any  mat- 
ter within  the  jurisdiction  of  the  bureau. 

[2657—1591.] 

SEC.  1437.  Contents  of  collectors  ani<  ual  report. — The  annual  report 
of  the  collector  of  internal  revenue  shall  contain  a  detailed  statement 


INTERNAL  REVENUE  LAWS.  13 

the  collections  and  disbursements  of  the  bureau  with  specifications 
of  the  sources  of  revenue  and  classes  of  disbursements. 

1:2657—1592.1 
ARTICLE  II. — Sources   of  internal  revenue. 
SEC.  1438.   (As  amended  by  sec.  2,  act  2819.)  Sources  of  taxes. — The 
following  taxes,  fees,  and  charges  in  the  nature  of  tax  are  deemed 
to  be  internal-revenue  taxes : 

(a)  The  cedilla  tax. 

(b)  The  documentary  tax. 

(c)  The  privilege  taxes  on  business  or  occupation. 

(d)  Specific  taxes  on  manufactured  products. 

(e)  Taxes  on  resources  of  banks,  receipts  of  insurance  companies, 
and  receipts  of  corporations  paying  a  franchise  tax. 

(/)   Charges  for  forest  products. 

(g)   Fees  for  testing  and  sealing  weights  and  measures. 
(h)   Internal  revenue,  including  the  income  tax. 
(i)   Ad  valorem  tax  on  the  output  of  mines. 

(j)   The  tax  on  inheritances,  legacies,  and  other  acquisitions  mortis 
causa. 
'.[2657—1583.] 

ARTICLE  III. — Cedula  tax. 

SEC.  1439.  Persons  liable  to  cedula  taw. — An  annual  internal- 
revenue  cedula  tax  shall  be  paid  by  all  male  inhabitants  of  the 
Philippine  Islands  over  the  age  of  18  and  under  60  years,  with  the 
following  exceptions : 

(a)   Commissioned  officers  of  the  United  States  Army  or  Navy. 

(£)  Enlisted  soldiers,  sailors,  and  marines  of  the  United  States 
Army  and  Navy. 

(c)  Civilian  employees  of  the  military  or  naval  branches  of  the 
United  States  Government  who  have  come  to  the  Philippine  Islands 
under  orders  of  the  Government  of  the  United  States. 

(d)  Diplomatic  and  consular  representatives  and  officials  of  for- 
eign powers. 

(e)  Paupers. 

v/)   Insane  persons. 

(g)  Imbeciles. 

(h)  Persons  serving  a  sentence  of  more  than  one  year  in  a  public 
prison. 

(i)  Non-Christians  living  elsewhere  than  in  the  Department  of 
Mindanao  and  Sulu  may  be  exempted  from  the  cedula  tax  by  reso- 
lution of  the  provincial  board,  Avith  the  approval  of  the  secretary 
of  the  interior.  A  copy  of  any  resolution  effecting  such  exemption 
shall  be  supplied  to  the  collector  of  internal  revenue. 

[2657—1594.] 


14  INTERNAL   REVENUE   LAWS. 

SEC.  1440.  Amount  of  the  cedula  tax.— The  cedula  tax  shall  be  1 
peso ;  but  in  the  city  of  Manila  and  in  any  Province  other  than  the 
Mountain  Province  and  Nueva  Vizcaya  it  may,  by  resolution  of  the 
respective  municipal  board  or  provincial  board  for  said  city  or 
Province,  be  increased  to  2  pesos.  Where  such  increase  is  effected 
it  shall  remain  in  force  until  abrogated  for  one  or  more  years  by 
resolution  of  the  board,  either  with  the  express  approval  of  the 
governor  general  or  upon  the  expiration  of  30  days  after  the  receipt 
by  him  of  such  resolution,  without  his  disapproval.  A  copy  of  any 
resolution  increasing  or  decreasing  the  tax  in  a  Province  shall  be  fur- 
nished by  the  provincial  treasurer  to  the  collector  of  internal  revenue. 

[2657—1595.] 

SEC.  1441.  Increase  of  tax  in  case  of  delinquency. — Upon  delin- 
quency, the  cedula  tax  to  which  any  person  is  liable  shall  be  subject 
to  the  following  surtax : 

(a)  If  the  tax  is  paid  after  the  30th  of  April  but  not  after  the 
30th  of  June  of  the  current  year,  the  surtax  shall  be  50  per  cent  of 
the  amount  in  which  the  taxpayer  is  delinquent. 

(fr)  If  the  tax  is  paid  after  the  30th  day  of  June  of  the  current 
year,  the  surtax  shall  be  100  per  cent  of  the  amount  in  which  the 
taxpayer  is  delinquent. 

[2657—1596.] 

SEC.  1442.  Pttyim-'nt  of  arrearages. — Any  person  delinquent  in  the 
payment  of  the  cedula  tax  for  former  years  may  obtain  a  cedula 
for  the  current  year  by  paying  at  the  same  time  for  a  cedula  for 
the  first  year  in  which  he  was  delinquent,  and  subscribing  to  an 
affidavit  in  which  he  shall  bind  himself  to  pay  for  his  unpaid 
cedillas  at  the  rate  of  one  for  each  two  or  six  months,  as  the  collector 
of  internal  revenue  may  determine,  as  follows : 

"I ,  a  native  of .  Province 

of ,  being years  of  age,  by  occupation 

a ,  and  residing  at  No. Street, 

in  the  municipality  of ,  Province  of , 

hereby  freely  and  voluntarily  declare  on  oath  that  it  is  my  desire, 

and  I  solemnly  agree,  to  pay  my  unpaid  cedillas  for  the  years 

at  the  rate  of  one  cedula  for ,  until  all  said  years  for  which 

I  am  now  delinquent  are  fully  paid ;  and  not  to  change  my  residence 
without  advising  the  municipal  treasurer  of  my  municipality  of  the 
address  of  my  new  residence. 

'  Noncompliancee  on  my  part  with  any  of  the  foregoing  condi- 
tions will  determine  the  annulment  of  the  present  agreement,  and 
I  shall  be  liable  to  the  proceedings  and  penal  provisions  of  existing 
law. 


IXTKRNAL    REVENUE   LAWS.  15 

"  In   testimony   whereof   I   have   hereunto    affixed   my   signature 
at  -  

«" Witnessed  by: 


The  cedula  for  the  current  year  issued  to  persons  delinquent  ^er 
oriner  years  shall  bear  an  indorsement  of  the  number  of  years  of 
delinquency,  a  practice  that  shall  be  followed  from  year  to  year  so 
long  as  the  delinquency  lasts. 

2(5:17—1597.] 

SEC.  1443.  Time  for  payment  of  cedula  tax — When  delinquency 
occurs. — Liability  for  the  cedula  tax  accrues  on  the  1st  of  January 
of  each  year  as  regards  persons  then  resident  in  the  islands  and  liable 
to  the  tax,  and  if  a  person  so  liable  fails  to  pay  the  tax  before  the  1st 
of  May  he  shall  be  delinquent.  As  regards  those  who  come  to  reside 
in  the  islands  prior  to  the  1st  of  July  and  those  who  reach  the  age 
of  18  years,  or  otherwise  lose  the  benefit  of  exemption  prior  to  that 
date,  liability  shall  attach  upon  the  day  of  arrival  or  upon  the  day 
exemption  ceases,  and  if  arriving  or  becoming  liable"  on  or"  before 
the  10th  of  April  they  shall  likewise  be  delinquent  upon  failure  to 
pay  the  tax  before  the  1st  of  May;  but  such  persons  arriving  or 
becoming  liable  after  the  10th  of  April,  shall  have  20  days  within 
which  to  pay  the  tax  without  becoming  delinquent. 

Persons  who  on  the  1st  of  January  are  serving  sentence  of  one  year 
or  less  in  prison  and  are  not  released  until  after  the  10th  of  April 
shall  have  20  days  after  their  release  within  which  to  pay  the  tax 
without  becoming  delinquent. 

Persons  who  come  to  reside  in  the  islands  or  arrive  at  the  age  of 
18  years  on  or  after  the  1st  of  July  of  any  year,  or  who  cease  to 
belong  to  an  exempt  class  on  or  after  the  same  date,  shall  not  be 
subject  to  the  tax  for  such  year. 

[2657—1598.] 

SEC.  1444.  Extension  of  time  for  payment  of  cedula  tax. — When  the 
public  interests  so  require,  the  provincial  board  of  any  province 
situated  elsewhere  than  in  the  Department  of  Mindanao  arid  'Sulu 
may,  by  resolution,  with  the  approval  of  the  governor  general,  ex- 
tend the  time  for  the  payment  of  the  cedula  tax  without  the  conse- 
quences of  delinquency  for  a  period  not  exceeding  three  months  in 
any  year.  In  the  Department  of  Mindanao  and  Sulu  such  extension 
may  be  made  for  a  period  not  exceeding  four  months  in  any  year, 
and  the  power  to  make  such  extension  shall  be  vested  in  the  provincial 
governor,  to  be  exercised  with  the  approval  of  the  governor  of  the 
department. 

[2657—1599.] 


16  INTERNAL   REVENUE   LAWS. 

SEC.  1445.  Remission  of  tax  in  Department  of  Mindanao  and 
Sulu. — The  governor  of  any  province  in  the  Department  of  Minda- 
nao and  Sulu  may,  with  the  approval  of  the  governor  of  the  depart- 
ment, order  a  cedula  issued  for  1  peso,  or  free  of  charge,  to  any  resi- 
dent in  any  locality  of  the  district  whenever  he  may  deem  this  to  bo 
in  the  public  interest. 

[2657—1600.] 

SEC.  1446.  Payment  of  cedula  tax  in  province  other  than  that  of 
domicile. — A  person  temporarily  absent  from  the  province  of  his 
domicile  may  pay  the  cedula  tax  in  any  province  where  he  is  so- 
journing; but  such  payment  in  a  province  where  the  tax  is  1  peso 
shall  not  remove  liability  for  the  additional  peso  to  which  the  tax- 
payer may  be  subject  in  the  province  of  his  domicile. 

[2657—1601.] 

SEC.  1447.  Presentation  of  cedula  certificate  upon  certain  occa- 
sions.— When  a  person  liable  to  the  cedula  tax  offers  himself  for 
registration  as  a  qualified  voter,  acknowledges  any  document  before 
a  notary  public,  takes  the  oath  of  office  upon  election  or  appointment 
to  any  position  in  the  Government  service,  receives  any  license,  cer- 
tificate, or  permit  from  any  public  authority,  pa}^s  any  tax,  receives 
any  money  from  any  public  fund,  or  transacts  other  official  business, 
it  shall  be  the  duty  of  the  officer  or  person  with  whom  such  trans- 
action is  had  or  business  done  to  require  the  exhibition  of  the  cer- 
tificate showing  the  payment  of  the  cedula  tax  by  such  person.  Such 
certificate  shall  be  the  one  issued  for  the  current  year,  except  during 
the  month  of  January  of  each  year,  and  except  also  in  the  case  of 
the  payment  of  the  cedula  tax  at  any  time  during  the  year,  in  which 
cases  the  exhibition  of  the  certificate  for  the  previous  year  shall 
suffice. 

[2657—1602.] 

SEC.  1448.  Secondary  certificate  in  lieu  of  destroyed  cedula  cer- 
tificate.— The  collector  of  internal  revenue,  upon  presentation  to  him 
of  satisfactory  proof  in  the  form  of  an  affidavit  of  the  actual  destruc- 
tion or  loss  of  a  cedula  certificate  by  accident,  fire,  or  other  casualty, 
and  without  any  fraud  or  negligence  on  the  part  of  the  taxpayer, 
shall  issue  gratuitously  a  secondary  certificate  showing  the  number 
of  the  original  certificate  and  its  date,  together  with  the  other  infor- 
mation contained  therein,  which  secondary  certificate  may  be  used 
in  lieu  of  the  original  certificate  for  all  purposes. 

[2657—1603.] 

ARTICLE   IV. — DOCUMENTARY   STAMP   TAX. 

SEC.  1449.  Stamp  tax  upon  documents  and  papers. — Upon  docu- 
ments, instruments,  and  papers,  and  upon  acceptances,  assignments, 
sales,  and  transfers  of  the  obligation,  right,  or  property  incident 


INTERNAL   REVENUE   LAWt 

locumentary  taxes  for  and  in  respect  of  the  transact] 
had  or  accomplished  shall  be  paid  as  hereinafter  prescribed,  by  tho 
person  making,  signing,  issuing,  accepting,  or  transferring  the  same, 
and  at  the  time  such  act  is  done  or  transaction  had : 

(«i)  On  all  bonds,  debentures,  and  certificates  of  indebtedness 
issued  by  any  association,  company,  or  corporation,  on  each  200  pesos 
or  fractional  part  thereof,  of  the  face  value  of  such  document,  20 
centavos. 

(fr)  On  every  original  issue,  whether  on  organization  or  on  re- 
organization, of  certificates  of  stock  by  any  such  association,  com- 
pany, or  corporation,  on  each  200  pesos,  or  fractional  part  thereof, 
of  the  face  value  of  such  certificate,  20  centavos. 

(c)  On  all  sales  or  agreements  to  sell,  or  memoranda  of  sales,  or 
deliveries,  or  transfer  of  shares  or  certificates  of  stock  in  any  asso- 
ciation, company,  or  corporation,  or  transfer  by  assignment  in  blank, 
or  by  delivery,  or  by  any  paper,  or  agreement,  or  memorandum,  or 
other  evidence  of  transfer  or  sale,  whether  entitling  the  holder  in 
any  manner  to  the  benefit  of  such  stock,  or  to  secure  the  future  pay- 
ment of  money,  or  for  the  future  transfer  of  any  stock,  on  each  200 
pesos,  or  fractional  part  thereof,  of  the  par  value  of  such  stock,  4 
centavos. 

'((I)  On  all  bonds,  debentures,  certificates  of  stock,  or  certificates 
of  indebtedness  issued  in  any  foreign  country  there  shall  be  paid  by 
the  person  here  selling  or  transferring  the  same,  such  tax  as  is  re- 
quired by  law  on  similar  instruments  when  issued,  sold,  or  trans- 
ferred in  the  Philippine  Islands. 

(e)  On  all  certificates  of  profits,  or  any  certificate 'or  memorandum 
showing  interest  in  the  property  or  accumulations  of  any  associa- 
tion, company,  or  corporation,  and  on  all  transfers  of  such  certificates 
or  memoranda,  on  each  200  pesos,  or  fractional  part  thereof,  of  the 
face  value  of  such  certificate  or  memorandum,  2  centavos. 

(/)  On  each  bank  check,  draft,  or  certificate  of  deposit,  not  draw- 
ing interest,  or  order  for  the  payment  of  any  sum  of  money  drawn 
upon  or  issued  by  any  bank,  trust  company,  or  any  person  or  persons, 
companies,  or  corporations,  at  sight  or  on  demand,  2  centavos. 

((/)  On  all  bills  of  exchange  (between  points  within  the  Philippine 
Islands),  drafts,  and  certificates  of  deposit  drawing  interest,  or  orders 
for  the  payment  of  any  sum  of  money  otherwise  than  at  sight  or  on 
demand,  and  on  all  promissory  notes,  except  bank  notes  issued  for 
circulation,  and  on  each  renewal  of  any  such  note,  on  each  200  pesos, 
or  fractional  part  thereof,  of  the  face  value  of  any  such  bill  of  ex- 
change, draft,  certificate  of  deposit,  or  note,  2  centavos. 

(h)  Upon  any  acceptance  or  payment  upon  acceptance  of  any  bill 
of  exchange  or  order  for  the  payment  of  money  purporting  to  be 
52853—21 2 


18  INTEBXAL   REVENUE   LAWS. 

drawn  in  a  foreign  country  but  payable  in  the  Philippine  Islands, 
on  each  200  pesos,  or  fractional  part  thereof,  of  the  face  value  of  any 
such  bill  of  exchange  or  order,  or  the  Philippine  equivalent  of  such 
value,  if  expressed  in  foreign  currency,  2  centavos. 

(i)  On  all  foreign  bills  of  exchange  and  letters  of  credit  (includ- 
ing orders,  by  telegraph  or  otherwise,  for  the  payment  of  money 
issued  by  express  or  steamship  companies  or  by  any  person  or  per- 
sons) drawn  in  but  payable  out  of  the  Philippine  Islands,  in  a  set 
of  three  or  more  according  to  the  custom  of  merchants  and  bankers, 
on  each  200  pesos,  or  fractional  part  thereof,  of  the  face  value  of  any 
such  bill  of  exchange  or  letter  of  credit,  or  the  Philippine  equivalent 
of  such  face  value,  if  expressed  in  foreign  currency,  4  centavos. 

( j)  On  all  policies  of  insurance  or  other  instruments  by  whatever 
name  the  same  may  be  called,  whereby  any  insurance  shall  be  made 
or  renewed  upon  any  life  or  lives,  on  each  200  pesos,  or  fractional 
part  thereof,  of  the  amount  insured  by  any  such  policy,  10  centavos. 

(k)  On  all  policies  of  insurance  or  other  instruments  by  whatever 
name  the  same  may  be  called,  by  which  insurance  shall  be  made  or 
renewed  upon  property  of  any  description,  including  rents  or  profits, 
against  peril  by  sea  or  on  inland  waters,  or  by  fire  or  lightning,  on 
each  4  pesos,  or  fractional  part  thereof,  of  the  amount  of  premium 
charged,  2  centavos. 

(I)  On  all  policies  of  insurance  or  bonds  or  obligations  of  the 
nature  of  indemnity  for  loss,  damage,  or  liability  made  or  renewed 
by  any  person,  association,  company,  or  corporation  transacting  the 
business  of  accident,  fidelity,  employer's  liability,  plate  glass,  steam 
boiler,  burglar,  elevator,  automatic  sprinkler,  or  other  branch  of  in- 
surance (except  life,  marine,  inland,  and  fire  insurance),  and  on  all 
bonds,  undertakings,  or  recognizances  conditioned  for  the  per- 
formance of  the  duties  of  any  office  or  position,  for  the  doing  or 
not  doing  of  anything  therein  specified,  and  on  all  obligations 
guaranteeing  the  validity  or  legality  of  any  bonds  or  other  obliga- 
tions issued  by  any  province,  municipality,  or  other  public  body  or 
organization,  and  on  all  obligations  guaranteeing  the  title  to  any  real 
estate,  or  guaranteeing  any  mercantile  credits,  which  may  be  made  or 
renewed  by  any  such  person,  company  or  corporation,  on  each  4  pesos, 
or  fractional  part  thereof,  of  the  premium  charged,  2  centavos. 

(m)  On  all  policies  of  annuities,  or  other  instruments  by  what- 
ever name  the  same  shall  be  called,  whereby  an  annuity  may  be 
made,  transferred,  or  redeemed,  on  each  200  pesos,  or  fractional  part 
thereof,  of  the  capital  of  the  annuity,  or  should  this  be  unknown, 
then  on  each  200  pesos,  or  fractional  part  thereof,  of  thirty-three 
and  one-third  times  the  annual  income,  10  centavos. 

(n)  On  each  bond  for  indemnifying  any  person,  firm,  or  corpora- 
tion who  shall  become  bound  or  engaged  as  surety  for  the  payment 


INTERNAL   REVENUE 

of  any  sum  of  money  or  for  the  due  execution  or  performance  of  the 
duties  of  any  office  or  position  or  to  account  for  money  received  by 
virtue  thereof,  and  on  all  other  bonds  of  any  description,  except  such 
as  may  be  required  in  legal  proceedings  or  are  otherwise  provided 
for  herein,  50  centavos. 

(o)  On  each  certificate  of  damage,  or  otherwise,  and  on  every™ 
other  certificate  or  document  issued  by  any  customs  officer,  marine 
surveyor,  or  other  person  acting  as  such,  and  on  each  certificate 
issued  by  a  notary  public,  and  on  each  certificate  of  any  description 
required  by  law,  or  by  rules  or  regulations  of  a  public  office,  or 
which  is  issued  for  the  purpose  of  giving  information,  or  establishing 
proof  of  a  fact,  and  not  otherwise  specified  herein,  20  centavos. 

(p)  On  each  warehouse  receipt  for  property  held  in  storage  in  a 
public  or  private  warehouse  or  yard  for  any  other  person  than  the 
proprietor  of  such  warehouse  or  yard  himself,  or  some  employee  of 
his  engaged  in  and  about  the  same,  20  centavos. 

(q)  On  each  set  of  bills  of  lading  or  receipts  (except  charter 
party)  for  any  goods,  merchandise,  or  effects  of  greater  value  than 
5  pesos,  to  be  exported  from  a  port  in  the  Philippine  Islands  to  any 
foreign  port,  10  centavos. 

(r)  On  each  set  of  bills  of  lading  or  receipts  (except  charter 
party)  for  goods,  merchandise,  or  effects  of  greater  value  than  5 
pesos  shipped  from  one  port  or  place  in  the  Philippine  Islands  to 
another  port  or  place  in  said  islands,  4  centavos. 

(s)  On  each  passage  ticket  or  any  receipt  for  money  paid  for 
passage  on  any  vessel  other  than  on  a  vessel  belonging  to  the  Insular 
Government  or  the  Government  of  the  United  States  from  any  port 
in  the  Philippine  Islands  to  a  port  in  the  United  States  or  to  any 
foreign  port : 

1.  If  said  passage  costs  not  more  than  60  pesos,  1  peso. 

2.  If  said  passage  costs  more  than  60  pesos  and  not  more  than 
120  pesos,  2  pesos. 

3.  If  said  passage  costs  more  than  120  pesos,  3  pesos. 

(t)  On  each  proxy  for  voting  at  any  election  for  officers  of  any 
incorporated  company  or  association,  except  associations  or  corpora- 
tions for  religious,  charitable,  or  literary  purposes  or  to  manage 
public  cemeteries,  20  centavos. 

(u)  On  each  power  of  attorney  to  perform  any  act  whatsoever, 
except  acts  connected  with  the  collection  of  claims  due  from  or 
accruing  to  the  Government  of  the  United  States,  the  government 
of  the  Philippine  Islands,  or  the  government  of  any  province  or 
municipality,  20  centavos. 

(v)  On  each  lease,  agreement,  memorandum,  or  contract  for  the 
hire,  use,  or  rent  of  any  lands  or  tenements,  or  portions  thereof : 

1.  If  executed  for  not  more  than  one  year,  20  centavos. 


20  INTERNAL   EE  VENUE   LAWS. 

2.  If  executed  for  more  than  one  year  and  not  more  than  three 
years,  50  centavos. 

3.  If  executed  for  a  period  of  more  than  three  years,  1  peso. 

(w)  On  every  mortgage  or  pledge  of  lands,  estate,  or  property, 
real  or  personal,  heritable  or  movable,  whatsoever,  where  the  same 
shall  be  made  as  a  security  for  the  payment  of  any  definite  and  cer- 
tain sum  of  money  lent  at  the  time  or  previously  due  and  owing  or 
forborne  to  be  paid  being  payable,  and  on  any  conveyance  of  land, 
estate,  or  property,  whatsoever,  in  trust  or  to  be  sold  or  otherwise 
converted  into  money,  which  shall  be  and  intended  only  as  security, 
either  by  express  stipulation  or  otherwise : 

1.  When  the  amount  for  which  the  mortgage  or  deed  of  trust  is 
given  is  not  less  than  1,000  pesos  nor  more  than  3,000  pesos,  50  cen- 
tavos. 

2.  On  each  3,000  pesos  or  fractional  part  thereof  in  excess  of  3,000 
pesos,  an  additional  tax  of  50  centavos. 

(a?)  On  all  conveyances,  deeds,  instruments,  or  writings,  other 
than  grants,  patents,  or  original  certificates  of  adjudication  issued 
by  the  Government,  whereby  any  lands,  tenements,  or  other  realty 
sold  shall  be  granted,  assigned,  transferred,  or  otherwise  conveyed 
to  the  purchaser  or  purchasers,  or  to  any  other  person  or  persons 
designated  by  such  purchaser  or  purchasers : 

1.  When  the  true  consideration,  or  value  received  or  contracted 
to  be  paid  for  such  realty,  after  making  proper  allowance  for  any 
incumbrance,  is  more  than  200  pesos  but  not  more  than  2,000  pesos, 
50  centavos. 

2.  For  each  additional  1,000  pesos,  or  fractional  part  thereof,  of 
such  true  consideration  or  value,  50  centavos. 

When  it  appears  that  the  amount  of  the  documentary  tax  payable 
hereunder  has  been  reduced  by  an  incorrect  statement  of  the  con- 
sideration in  any  conveyance,  deed,  instrument,  or  writing  subject  to 
such  tax,  the  collector  of  internal  revenue,  provincial  treasurer,  or 
other  revenue  officer  shall,  from  the  assessment  rolls  or  other  reliable 
source  of  information,  assess  the  property  at  its  true  market  value 
and  collect  the  proper  tax  thereon. 

(?/)  On  every  charter  party,  contract,  or  agreement  for  the  charter 
of  any  ship,  vessel,  or  steamer,  or  anj^  letter  or  memorandum  or 
other  writing  between  the  captain,  master,  or  owrner,  or  other  per- 
son acting  as  agent  of  any  ship,  vessel,  or  steamer,  and  any  other 
person  or  persons  for  or  relating  to  the  charter  of  any  such  ship, 
vessel,  or  steamer,  and  on  any  renewal  or  transfer  of  such  charter, 
contract,  agreement,  letter,  or  memorandum  : 

1.  If  the  registered  gross  tonnage  of  the  ship,  vessel,  or  steamer 
is  not  more  than  300  tons,  6  pesos. 


INTERNAL   EEVENUE   LAWS.  21 

2.  If  the  registered  gross  tonnage  is  more  than  300  tons  but  not 
more  than  600  tons,  10  pesos.         . 

3.  If  the  registered  gross  tonnage  is  more  than  600  tons,  20  pesos. 
(2)   Upon  each  and  every  assignment  or  transfer  of  any  mortgage, 

lease,  or  policy  of  insurance,  or  the  renewal  or  continuance  of  any- 
agreement,  contract,  or  charter  by  altering  or  otherwise,  a  stamp  tax 
shall  be  levied,  collected,  and  paid  at  the  same  rate  as  that  imposed 
on  the  original  instrument. 
2657— 1604.  ] 

SEC.  1450.  Document*  and  papers  not  subject  to  stamp  tax. — The 
following  instruments,  documents,  and  papers  shall  be  exempt  from 
the  documentary  stamp  tax: 

(a)  Bonds,  debentures,  and  certificates  of  indebtedness  issued  by 
the  Insular  Government  or  any  provincial  or  municipal  government. 

(I)  Checks,  drafts,  warrants,  and  bills  of  exchange  issued  in  pay- 
ment of  any  debt,  obligation,  or  liability,  or  in  fulfillment  of  any 
contract  of  the  Government  of  the  United  States,  or  the  Insular 
Government,  or  of  a  provincial  or  municipal  government. 

(r)  Policies  of  insurance  or  annuities  made  or  granted  by  a 
fraternal  or  beneficiary  society,  order,  association,  or  cooperative 
company,  operated  on  the  lodge  system  or  local  cooperation  plan, 
and  organized  and  conducted  solely  by  the  members  thereof  for  the 
c-xclusive  benefit  of  its  members  and  not  for  profit. 

(d)  Certificates  of  oaths  administered  to  any  Government  official, 
in  his  official  capacity,  or  of  acknowledgment  by  any  Government 
official  in  the  performance  of  his  official  duties ;  written  appearances 
in  any  court  by  any  Government  official,  in  his  official  capacity;  cer- 
tificates of  the  administration  of  oaths  to  any  person  as  to  the  au- 
thenticity of  any  paper  required  to  be  filed  in  court  by  any  person 
or  party  thereto,  whether  the  proceedings  be  civil  or  criminal ;  papers 
and  documents  filed  in  courts  for  the  military,  naval,  insular,  pro- 
vincial, or  municipal  governments,  whether  civil  or  criminal;  affi- 
davits of  poor  persons  for  the  purpose  of  proving  poverty;  state- 
ments and  other  compulsory  information  required  of  persons  or  cor- 
porations by  rules  and  regulations  of  the  military,  naval,  insular, 
provincial,  or  municipal  governments  exclusively  for  statistical  pur- 
poses and  which  aro  wholly  for  the  use  of  the  bureau  in  which  the 
same  are  filed,  and  not  at  the  instance  of,  or  for  the  use  or  benefit 
of.  the  person  filing  the  same;  certified  copies  and  other  certificates 
placed  upon  documents,  instruments,  and  papers  for  the  military, 
naval,  insular,  provincial,  or  municipal  governments,  made  at  the 
instance  and  for  the  sole  use  of  some  other  branch  of  the  military, 
naval,  insular,  provincial,  or  municipal  governments;  and  certificates 
of  the  assessed  value  of  lanus,  not  exceeding  200  pesos  in  value  as- 


22  INTERNAL   REVENUE   LAWS. 

sessed,  furnished  by  provincial  or  municipal  treasurers  to  applicants 
for  registration  of  title  to  land.  • 

When  any  bond,  note,  or  other  obligation  is  secured  by  a  mortgage, 
pledge,  deed  of  trust,  or  by  the  assignment  or  transfer  of  any  docu- 
mentary security,  one  tax  only  shall  be  collected  upon  such  papers, 
such  tax  to  be  at  the  highest  rate  imposed  on  such  mortgage,  bond, 
note,  obligation,  or  other  document  as  the  case  may  be. 

[2657—1605.] 

SEC.  1451.  Payment  of  documentary  stamp  tax — Cancellation  of 
stamp. — Documentary  taxes  shall  be  paid  by  the  purchase  and  affix- 
ture of  documentary  stamps  to  the  document  or  instrument  taxed 
or  to  such  other  paper  as  may  be  indicated  by  law  as  the  proper 
recipient  of  the  stamp,  and  by  the  subsequent  cancellation  of  the 
same,  such  cancellation  to  be  accomplished  by  writing  or  stamping 
the  date  across  the  face  of  the  stamp  in  such  manner  that  part  of 
the  writing  or  impression  shall  be  on  the  stamp  itself  and  part  on 
the  paper  to  which  it  is  attached. 

When  the  evidence  of  a  sale  or  transfer  is  shown  only  on  the 
books  of  a  company,  the  stamp  shall  be  affixed  to  such  books;  and 
in  case  the  change  of  ownership  is  by  transfer  of  certificates  the 
stamp  shall  be  affixed  to  the  certificate ;  and  in  case  of  an  agreement 
to  sell,  or  when  the  transfer  is  by  delivery  of  the  certificate  assigned 
in  blank,  there  shall  be  made  and  delivered  by  the  seller  to  the 
buyer  a  bill  or  memorandum  of  such  sale  to  which  the  stamp  shall 
be  affixed ;  and  every  such  bill  or  memorandum  of  sale,  or  agreement 
to  sell,  shall  show  the  date  thereof,  the  name  of  the  seller  and  of 
the  purchaser,  the  amount  of  the  sale,  and  matter  or  thing  to  which 
it  refers. 

[2657—1606.] 

SEC.  1452,  (As  amended  by  sec.  2,  act  No.  2835.)  Effect  of  failure  to 
stamp  taxable  document. — An  instrument,  document,  or  paper  which 
is  required  by  law  to  be  stamped  and  which  has  been  signed,  issued, 
accepted,  or  transferred  without  being  duly  stamped  shall  not  be 
recorded,  nor  shall  it  or  any  copy  thereof  or  any  record  of  transfer 
of  the  same  be  admitted  or  used  in  evidence  in  any  court  until  the 
requisite  stamp  or  stamps  have  been  affixed  thereto. 

No  notary  public  or  other  officer  authorized  to  administer  oaths 
shall  add  his  jurat  or  acknowledgment  to  any  document  subject  to 
documentary  stamp  tax  unless  the  proper  documentary  stamps  are 
affixed  thereto  and  canceled. 

[2657—1607.] 

ARTICLE  V. — PRIVILEGE  TAXES. 

SEC.  1453.  Privilege  taxes  on  business  and  occupation. — A  privi- 
lege tax  must  be  paid  before  any  business  or  occupation  hereinafter 
specified  can  be  lawfully  begun  or  pursued.  The  tax  on  business  is 


INTERNAL   REVENUE   LAWS.  23 

payable  for  every  separate  or  distinct  establishment  or  place  where 
business  subject  to  the  tax  is  conducted;  and  one  occupation  or  line 
of  business  does  not  become  exempt  by  being  conducted  with  some 
other  occupation  or  business  for  which  such  tax  has  been  paid. 

The  occupation  tax  must  be  paid  by  each  individual  engaged  in 
a  calling  subject  thereto,  the  tax  on  a  business,  by  the  person,  firmr 
or  company  conducting  the  same. 

[2657—1608.] 

SEC.  1454.  Legality  of  business  as  affected  ~by  payment  of  tax. — 
The  payment  of  a  business  or  occupation  tax  shall  not  exempt  any 
person  from  any  tax,  penalty,  or  punishment  provided  by  law  or 
ordinance  in  places  where  such  business  or  occupation  is  prohibited 
or  regulated  by  municipal  law,  nor  shall  the  payment  of  any  such 
tax  be  held  to  prohibit  any  municipality  from  placing  a  tax  upon 
the  same  business  or  occupation,  for  local  purposes,  where  the  im- 
position of  such  tax  is  authorized  by  law. 

[2657—1609.] 

SEC.  1455.  Time  for  payment  of  ftxed  taxes. — The  yearly  fixed 
taxes  are  due  on  the  1st  of  January  of  each  year,  and,  if  tendered  in 
quarterly  installments  on  or  before  the  20th  of  January,  April,  July, 
and  October,  or  on  or  before  the  last  day  of  said  months,  in  remote 
provinces,  in  the  discretion  of  the  collector  of  internal  revenue,  shall 
be  received  without  penalty.  But  any  person  first  beginning  a  busi- 
ness or  occupation  must  pay  the  tax  before  engaging  therein. 

[2657—1610.] 

SEC.  1456.  Reckoning  tax  for  business  first  begun  or  abandoned 
duihig  year. — When  an  occupation  or  business  subject  to  a  fixed  tax 
is  newly  begun  during  any  year  the  tax  shall  be  reckoned  :rrom  the 
commencement  of  the  current  quarter,  or  in  case  of  a  business  subject 
to  a  monthly  tax,  from  the  first  of  the  month ;  and  when  either  is  at 
any  time  abandoned,  the  tax  shall  not  be  exacted  for  a  longer  period 
than  to  the  end  of  the  quarter  or  month,  as  the  case  may  be. 

[2657—1611.] 

SEC.  1457.  Fixed  tax  upon  business  subject  to  percentage  tax. — 
Every  person  not  hereinbelow  exempted  engaging  in  a  business  on 
which  the  percentage  tax  is  imposed  shall  pay  a  fixed  annual  tax  of 
2  pesos.  This  tax  shall  be  payable  for  each  calendar  year  or  fraction 
thereof  in  which  such  person  shall  engage  in  said  business.  If  his 
receipts  do  not  come  up  to  the  minimum  limit  established  for  the 
percentage  tax.  he  may  continue  in  business  without  further  tax  until 
the  first  day  of  the  next  following  year.  In  any  case  the  amount 
of  liis  business  must  be  reported  quarterly  as  required  in  the  next 
succeeding  section. 

The  fixed  annual  tax  shall  be  payable  before  the  person  subject  to 
the  same  begins  to  engage  in  the  business,  and  thereafter  within 


24  INTERNAL   REVENUE   LAWS. 

the  regulation  period  in  the  month  of  January  during  which  tht 
other  fixed  privilege  taxes  may  be  paid  without  penalty. 

The  following  shall  be  exempt  from  the  tax  imposed  in  this  sec- 
tion: 

(a)  Persons  engaged  in  public  market  places  in  the  sale  of  food 
products  at  retail,  and  other  small  merchants  whose  gross  quarterly 
sales  do  not  e'xceed  200  pesos. 

(&)  Peddlers  and  sellers  at  fixed  stands  of  fruit,  produce,  and 
food,  raw  or  otherwise,  the  total  selling  value  whereof  does  not 
exceed  3  pesos  per  day  and  who  do  not  renew  their  stock  oftener 
than  once  every  24  hours. 

((?)  Producers  of  commodities  of  all  classes  working  in  their  own 
homes,  consisting  of  parents  and  children  living  as  one  family,  when 
the  value  of  each  day's  production  by  each  person  capable  of  work- 
ing is  not  in  excess  of  1  peso. 

(d)  Owners  of  a  single  two-wheeled  vehicle  habitually 'driven  by 
themselves. 

(e)  Owners  of  a  single  banca  habitually  operated  by  themselves. 
[2657—1612.] 

SEC.  1458.  (As  amended  by  sec.  2,  act  No.  2892.)  Payment  of  percent- 
age taxes — Quarterly  report  of  earnings. — The  percentage  taxes  on 
business  shall  be  payable  at  the  end  of  each  calendar  quarter  in  the 
amount  lawfully  due  on  the  business  transacted  during  each  quar- 
ter; and  it  shall  be  the  duty  of  every  person  conducting  a  business 
subject  to  such  tax,  within  the  same  period  as  is  allowed  for  the  pay- 
ment of  the  quarterly  installments  of  the  fixed  taxes  without  penalty, 
to  make  a  true  and  complete  return  of  the  amount  of  the  receipts  or 
earnings  of  his  business  during  the  preceding  quarter  and  pay  the 
tax  due  thereon :  Provided,  however,  That  it  shall  be  the  duty  of  any 
person  retiring  from  a  business  subject  to  the  percentage  tax  before 
the  expiration  of  the  calendar  quarter  to  notify  the  nearest  internal- 
revenue  officer  thereof,  file  his  declaration,  and  pay  the  tax  due  on  his 
business  immediately  after  closing  the  same. 

If  the  percentage  tax  on  any  business  is  not  paid  within  the  time 
prescribed  above  the  amount  of  the  tax  shall  be  increased  by  25  per 
centum,  the  increment  to  be  a  part  of  the  tax. 

[2657—1613.] 

SEC.  1459.  Percentage  tax  on  merchants'  sales. — All  merchants  not 
herein  specifically  exempted  shall  pay  a  tax  of  1  per  centum  on  the 
gross  value  in  money  of  the  commodities,  goods,  wares,  and  mer- 
chandise sold,  bartered,  exchanged,  or  consigned  abroad  by  them, 
such  tax  to  be  based  on  the  actual  selling  price  or  value  of  the  things 
in  question  at  the  time  they  are  disposed  of  or  consigned,  whether 
consisting  of  raw  material  or  of  manufactured  or  partially  manu- 


INTERNAL    REVENUE   LAWS.  25 

factured  products,  and  whether  of  domestic  or  foreign  origin.    The 
tax  upon  things  consigned  abroad  shall  be  refunded  upon  satisfac- 
tory proof  of  the  return  thereof  to  the  Philippine  Islands  unsold. 
The  following  shall  be  exempt  from  this  tax  : 

(a)  Persons  engaged  in  public  market  places  in  the  sale  of  food 
products  at  retail,  and  other  small  merchants  whose  gross  quarterly 
sales  do  not  exceed  200  pesos. 

(b)  Peddlers  and  sellers  at  fixed  stands  of  fruit,  produce,  and 
food,  raw  or  otherwise,  the  total  selling  value  whereof  does  not  ex- 
ceed 3  pesos  per  day  and  who  do  not  renew  their  stock  oftener  than 

<e  every  24  hours. 
c)   Producers  of  commodities  of  all  classes  working  in  their  own 
homes,  consisting  of  parents  and  children  living  as  one  family,  when 
the  value  of  each  day's  production  by  each  person  capable  of  working 
is  not  in  excess  of  1  peso. 

'Merchant,"  as  here  used,  means  a  person  engaged  in  the  sale, 

rter,  or  exchange  of  personal  property  of  whatever  character. 
Except  as  specially  provided,  the  term  includes  manufacturers  who 
sell  articles  of  their  own  production  and  commission  merchants  hav- 
ing establishments  of  their  own  for  the  keeping  and  disposal  of  goods 
of  which  sales  or  exchanges  are  effected,  but  does  not  include  mer- 
chandise brokers. 

[2657—1614.] 

SEC.  1460.  /Sales  not  subject  to  merchant \s  tax. — In  computing  the 
tax  above  imposed  transactions  in  the  following  commodities  shall 
be  excluded : 

(a)  Things  subject  to  a  specific  tax. 

(b)  Agricultural  products  when  sold  by  the  producer  or  owner  of 
the  land  where  grown,  or  by  any  other  person  other  than  a  merchant 
or  commission  merchant,  whether  in  their  original  state,  or  not. 

[2G57— 1615.] 

SEC.  1461.  Percentage  tax  on  printers,  publishers,  and  litho- 
graphers.— Printers,  publishers,  and  lithographers  shall  pay  a  tax 
equivalent  to  1  per  centum  of  their  gross  receipts ;  but  persons  en- 
gaged in  the  publication  of  printing  and  publication  of  any  news- 
paper, magazine,  review,  or  bulletin  appearing  at  regular  intervals 
and  having  fixed  prices  for  subscription  and  sale  shall  not  be  taxed 
on  receipts  from  sales  of,  subscription  to,  or  advertisements  in  such 
publication;  but  this  exemption  shall  not  apply  to  any  publication 
the  principal  purpose  of  which  is  the  publication  of  advertisements. 

[2657— 161&] 

SEC.  1462.  Percentage  tax  on  contractors,  warehousemen,  and 
others. — Contractors,  warehousemen,  proprietors  of  dockyards,  and 
persons  selling  light,  heat,  or  power,  as  well  as  persons  engaged  in 


26  INTERNAL   REVENUE   LAWS. 

conducting  telephone  or  telegraph  lines,  or  exchanges,  and  pro- 
prietors of  steam  laundries,  and  of  shops  for  the  construction  and 
repair  of  bic}^cles  or  vehicles  of  any  kind,  and  keepers  of  hotels  and 
restaurants  shall  pay  a  tax  equivalent  to  1  per  centum  of  their  gross 
receipts. 

[2657—1617.] 

SEC.  1463.  Percentage  tax  on  carriers  and  keepers  of  stables  and 
garages. — Keepers  of  livery  stables  and  garages,  transportation  con- 
tractors, persons  who  transport  passengers  or  freight  for  hire,  and 
common  carriers  by  land  or  water,  except  owners  of  boats  taxed  under 
the  laws  administered  by  the  Bureau  of  Customs,  owners  of  a  single 
banca  who  habitually  operate  the  same  themselves,  and  owners  of 
a  single  two-wheeled  vehicle  who  habitually  drive  same  themselves, 
shall  pay  a  tax  equivalent  to  1  per  centum  of  their  gross  receipts. 

[2657—1618.] 

SEC.  1464.  (As  amended  by  sec.  3,  act  No.  2835,  and  sec.  1,  act  No. 
2925.)  Amount  of  tax  on  business. — Fixed  taxes  on  business  shall  be 
collected  as  follows,  the  amount  stated  being  for  the  whole  year, 
when  not  otherwise  specified : 

(a)  Distillers  of  spirits,  300  pesos. 

(b)  Brewers,  400  pesos. 

(c)  Rectifiers  of  distilled  spirits,  300  pesos. 

(d)  Manufacturers  of  tobacco,  20  pesos. 

(e)  Manufacturers  of  cigars,  20  pesos. 
(/)  Wholesale  liquor  dealers — 

1.  In  city  of  Manila,  400  pesos. 

2.  In  any  other  place,  120  pesos. 
(g)  Retail  liquor  dealers,  60  pesos. 
(A)   Retail  vino  dealers,  12  pesos. 

(i)  Wholesale  dealers  in  fermented  liquors,  120  pesos. 

(j)   Retail  dealers  in  fermented  liquors,  30  pesos. 

(k)  Retail  dealers  in  tuba,  basi,  and  tapuy,  10  pesos. 

(I)  Tobacco  dealers,  8  pesos. 

(m)  Retail  leaf  tobacco  dealers,  20  pesos. 

(n)  Wholesale  peddlers  of  manufactured  tobacco,  80  pesos. 
Wholesale  peddlers  of  distilled,  manufactured,  or  fermented  liquor, 
120  pesos. 

(o)  Retail  peddlers  of  manufactured  tobacco,  16  pesos.  Retail 
peddlers  of  distilled,  manufactured,  or  fermented  liquor,  60  pesos. 

(p)  Business  agents  (agentes  de  negocios),  40  pesos. 

(q)  Proprietors  of  cockpits,  200  pesos;  and  for  each  cockfight 
(soltada),  a  tax  of  25  centavos. 

(r)  Proprietors  of  theaters,  museums,  cinematographs,  and  concert 
halls— 

L  In  city  of  Manila,  200  pesos. 


INTERNAL   REVENUE   LAWS.  27 

2.  In  any  other  place,  100  pesos;  or  in  this  case,  by  the  month,  10 
pesos. 

(s)  Proprietors  of  circuses  giving  exhibitions  in  one  or  more  places 
or  provinces,  200  pesos. 

(t)   Proprietors  of  billiard  rooms,  for  each  table,  10  pesos. 

(u)  Owners  of  race  tracks,  for  each  day  on  which  races  are  run 
on  any  track,  300  pesos. 

(v)  Pawnbrokers,  400  pesos. 

(10)  Stock  brokers,  real  estate  brokers,  and  commercial  brokers, 
80  pesos. 

(x]  Money  lenders,  200  pesos. 

(y)  Repackers  of  wines  or  distilled  spirits,  300  pesos. 

SEC.  1465.  (As  amended  by  sec.  4,  act  2835.)  Words  and  phrases  de- 
fined.— In  applying  the  provisions  of  the  preceding  section  words 
and  phrases  shall  be  taken  in  the  sense  and  extension* indicated  below : 

(a)  "Distiller  of  spirits"  comprises  all  who  distill  spirituous  liq- 
uors by  original  and  continuous  distillation  from  mash,  wort,  wash, 
sap,  or  sirup  through  continuous  closed  vessels  and  pipes  until  the 
manufacture  thereof  is  complete. 

(b)  "Brewer"  comprises  all  persons  who  manufacture  fermented 
liquors  of  any  description  for  sale  or  delivery  to  others,  but  not  in- 
cluding manufacturers  of  tuba,  basi,  or  tapuy,  or  similar  domestic 
fermented  liquors  whose  daily  production  does  not  exceed  200  gauge 
liters. 

(c)  "Rectifier"  comprises  every  person  who  rectifies,  purifies,  or 
refines  distilled  spirits  or  wines  by  any  process  other  than  by  original 
and  continuous  distillation  from  mash,  wort,  wash,  sap,  or  sirup 
through  continuous  closed  vessels  and  pipes  until  the  manufacture 
thereof  is  complete.    Every  wholesale  or  retail  liquor  dealer  who  has 
in  his  possession  any  still  or  mash  tub,  or  who  keeps  any  other  appa- 
ratus for  the  purpose  of  distilling  spirits  or  in  any  manner  refining 
distilled  spirits,  and  every  person  who,  without  rectifying,  purify- 
ing, or  refining  distilled  spirits,  shall,  by  mixing  such  spirits,  wine, 
or  other  liquor  with  any  materials  except  water,  manufacture  any  in- 
toxicating beverage  whatever,  shall  also  be  regarded  as  a  rectifier 
and  as  being  engaged  in  the  business  of  rectifying. 

(d)  "  Manufacturer  of  tobacco  "  includes  every  person  whose  busi- 
ness it  is  to  manufacture  tobacco  or  snuff,  or  who  employs  others  to 
manufacture  tobacco  or  snuff,  whether  such  manufacture  be  by  cut- 
ting, pressing,  grinding,  or  rubbing  any  raw  or  leaf  tobacco,  or  other- 
wise preparing  raw  or  leaf  tobacco  or  manufactured  or  partially 
manufactured  tobacco   and  snuff  or   putting  up   for  consumption 
scraps,  refuse,  or  stems  of  tobacco  resulting  from  any  process  of 
handling  tobacco,  or  by  working  or  preparing  leaf  tobacco,  tobacco 


28  INTERNAL    EE VENUE   LAWS. 

stems,  scraps,  clippings,  or  waste  by  sifting,  twisting,  screening,  or 
by  any  other  process. 

(e)  "Manufacturer  of  cigars"  includes  those  whose  business  it  is 
to  make  or  manufacture  cigars  or  cigarettes  for  sale  or  who  employ 
others  to  make  or  manufacture  cigars  or  cigarettes  for  sale ;  but  the 
term  does  not  include  artisans  or  apprentices  employed  to  make 
cigars  or  cigarettes  from  material  supplied  by  the  employer,  the 
latter  being  lawfully  engaged  in  the  manufacture  of  cigars  and 
cigarettes. 

(/)  "  Wholesale  liquor  dealer  "  comprehends  every  person  who  for 
himself  or  on  commission  sells  or  offers  for  sale  wines  or  distilled 
spirits  (other  than  denatured  alcohol)  in  larger  quantities  than  5 
liters  at  any  one  time,  or  who  sells  or  offers  the  same  for  sale  for 
the  purpose  of  resale  irrespective  of  quantity. 

(ff)  "Retail  liquor  dealer"  includes  every  person,  except  a  retail 
vino  dealer,  who  for  himself  or  on  commission  sells  or  offers  for 
sale  wine  or  distilled  spirits  (other  than  denatured  alcohol)  in  quan- 
tities of  5  liters  or  less  at  any  one  time  and  not  for  resale. 

(h)  "Retail  vino  dealer"  includes  every  person  who  for  himself 
or  on  commission  sells  or  offers  for  sale  only  domestic  distilled  spirits 
in  quantities  of  5  liters  or  less  at  any  one  time  and  not  for  resale. 

(i)  "Wholesale  dealer  in  fermented  liquors"  means  anyone,  who 
for  himself  or  on  commission  sells  or  offers  for  sale  fermented  liquors 
in  larger  quantities  than  5  liters  at  any  one  time,  or  who  sells  or 
offers  for  sale  such  fermented  liquors  (excluding  tuba,  basi,  tapuy, 
and  similar  domestic  fermented  liquors)  for  the  purpose  of  resale, 
regardless  of  quantity. 

(j)  "  Retail  dealer  in  fermented  liquors  "  includes  every  person, 
except  retail  dealers  in  tuba,  basi,  and  tapuy,  who  for  himself  or  on 
commission  sells  or  offers  for  sale  fermented  liquors  in  quantities  of 
5  liters  or  less  at  any  one  time  and  not  for  resale. 

(/-)  "Retail  dealer  in  tuba,  basi,  or  tapuy"  includes  every  person 
who  for  himself  or  on  commission  sells  or  offers  for  sale  tuba,  basi, 
or  tapuy,  or  similar  domestic  fermented  liquor,  in  quantities  of  less 
than  2  decaliters  at  any  one  time. 

(/)  "Tobacco  dealer"  comprehends  every  person  who  for  him- 
self or  on  commission  sells  or  offers  for  sale  cigars,  cigarettes,  or 
manufactured  tobacco. 

(m)  "Retail  leaf  tobacco  dealer"  includes  every  person  who  for 
himself  or  on  commission  sells  leaf  tobacco  or  offers  the  same  for 
sale  to  any  person  except  a  registered  dealer  in  leaf  tobacco  or  ;i 
manufacturer  of  cigars,  cigarettes,  or  manufactured  tobacco:  but 
the  term  does  not  include  a  planter  or  producer  so  far  as  concem-: 
the  sale  of  leaf  tobacco  of  his  own  production. 


INTERNAL    EE  VENUE   LAWS.  29 

(n)  "  Peddler  "  means  any  person  who  either  for  himself  or  on  com- 
mission travels  from  place  to  place  in  town  or  country  and  sells  his 
goods  or  offers  to  sell  and  deliver  the  same.  Whether  a  peddler  is  a 
wholesale  peddler  or  a  retail  peddler  of  a  particular  commodity,  shall 
be  determined  from  the  definitions  of  wholesale  dealer  and  retail 
dealer,  as  above  given,  in  connection  with  the  particular  commodity 
peddled.  A  wholesale  peddler  of  manufactured  tobacco  is  one  who 
sells  for  the  purpose  of  resale. 

(0)  "Theater"  includes  every  edifice  used  for  the  purpose  of 
operatic  and  dramatic  or  other  representations,  plays,  or  perform- 
ances, for  admission  to  which  entrance  money  is  received. 

(p)  "Circus"  includes  every  building,  tent,  or  area  where  feats 
of  horsemanship  or  acrobatic  sports  are  exhibited,  but  does  not  in- 
clude traveling  circuses  performing  in  streets  or  squares  or  in  build- 
ings not  intended  for  amusement  purposes. 

(q)  "  Billiard  room  "  includes  every  building  or  place,  open  to  the 
public,  where  games  of  billiards  or  pool  are  played,  with  or  without 
charge. 

(r)  "Proprietor"  of  a  circus,  theater,  museum,  cinematograph, 
cockpit,  concert  hall,  or  billiard  room  means  the  person  or  persons 
having  a  proprietary  interest  in  the  conducting  thereof. 

(s)  "Owner  of  a  race  track"  comprises  every  person  who  owns, 
leases,  or  controls  a  track  where  horses  are  entered  and  races  are  run 
as  a  public  exhibition,  whether  or  not  money  is  bet  on  the  result  of 
such  races. 

(t)  "Pawnbroker"  includes  all  persons  whose  business  or  occupa- 
tion it  is  to  take  or  receive  by  wray  of  pledge  or  pawn  any  goods, 
wares,  or  merchandise  or  any  kind  of  personal  property  whatever,  ex- 
cept agricultural  products,  as  security  for  the  repayment  of  money 
loaned  thereon. 

•Xo  bank  paying  the  special  tax  imposed  on  banks  or  their  resources 
shall  be  required  to  pay  the  privilege  tax  imposed  on  stockbrokers, 
real  estate  brokers,  pawnbrokers,  or  money  lenders. 

(u)  "Stockbroker"  includes  all  persons  whose  business  it  is,  for 
themselves  or  others,  to  negotiate  purchases  or  sales  of  stocks,  bonds, 
exchange,  bullion,  coined  money,  bank  notes,  promissory  notes,  or 
other  securities. 

(v)  "Money  lender"  includes  all  persons  who  make  a  practice 
of  lending  money  for  themselves  or  others  at  interest. 

(w)  "Real  estate  broker"  includes  all  persons  whose  business  it 
is,  for  themselves  or  others,  to  negotiate  purchases  or  sales  of  lands, 
buildings,  or  interest  therein,  or  to  negotiate  loans  secured  by  lands, 
buildings,  or  interest  therein,  or  to  rent  real  estate  for  others  or  to 
collect  rents  thereon. 


30  INTERNAL   REVENUE   LAWS. 

(a?)  "  Commercial  brokers  "  includes  all  persons,  other  than  com 
mission  merchants  and  salaried  employees,  whose  business  it  is  to 
bring  about  sales  or  purchases  of  merchandise  for  other  persons, 
or  to  bring  proposed  buyers  and  sellers  together,  or  to  negotiate 
freights  or  other  business  for  the  owners  of  vessels,  or  for  the  ship- 
pers or  consignors  or  consignees  of  freight  carried  by  vessels,  for  a 
compensation. 

(y)  "  Business  agent "  (agente  de  negocios)  includes  all  persons 
who  act  as  agents  of  others  in  the  transaction  of  business  with  any 
public  officer,  as  well  as  those  who  conduct  collecting,  advertising, 
employment,  or  private  detective  agencies. 

(z)  "Repacker  of  wines  or  distilled  spirits"  includes  all  persons 
who  remove  wines  or  distilled  spirits  from  the  original  container  for 
repacking  and  selling  the  same  at  wholesale. 

SEC.  1466.  (As  amended  by  sec.  5,  act  2835.)  Percentage  tax  on  stock, 
real  estate,  and  commercial  brokers. — Stock,  real  estate,  and  com- 
mercial brokers  shall  pay  a  percentage  tax  equivalent  to  4  per  centum 
of  the  gross  compensation  received  by  them  in  excess  of  500  pesos 
per  quarter. 

The  collector  of  internal  revenue  shall  be  authorized  to  prescribe, 
by  regulation,  the  records  to  be  kept  by  stock,  real  estate,  and  com- 
mercial brokers  subject  to  the  tax.  These  records  shall  be  considered 
public  and  official  documents  for  all  purposes. 

The  records  kept  by  said  brokers  may  be  used  as  evidence  to  deter- 
mine the  amount  of  the  percentage  tax  due  by  them,  and  the  collector 
of  internal  revenue  may  assess  and  collect  the  tax  due  on  the  com- 
pensation earned  in  accordance  with  said  records. 

In  any  case,  the  amount  of  the  compensation  of  said  brokers  shall 
be  reported  quarterly  within  the  time  established  for  the  other  quar- 
terly reports  of  sales  and  receipts. 

[2657—1621.] 

SEC.  1467.  Increase  of  tax  on  cockpits. — A  municipal  council  may 
by  ordinance  in  any  year  fix  the  tax  for  the  ensuing  calendar  year  or 
37ears  on  any  cockpit  in  any  such  municipality  at  a  larger  amount 
than  that  stated  above. 

Written  notice  of  such  action  shall  be  sent  to  the  collector  of  inter- 
nal revenue  before  the  sjime  shall  become  effective. 

[2657—1622.] 

SEC.  1468.  Reduction  of  tax  on  race  tracks. — The  provincial  board 
of  any  province  or  the  city  council  of  Baguio,  for  said  city,  may  in 
any  year  reduce  the  per  diem  tax  on  race  tracks  for  the  ensuing  cal- 
endar year  or  years  to  any  amount  not  less  than  20  pesos ;  but  no  such 
reduction  shall  be  made  for  the  city  of  Manila. 


INTERNAL   REVENUE   LAWS.  31 

Written  notice  of  such  action  shall  be  sent  to  the  collector  of  inter- 
nal revenue  before  the  same  shall  become  effective. 
[2657—1623.] 

SEC.  1469.  Privilege  secured  ~by  payment  of  tax. — A  person  who 
has  paid  the  tax  as  a  manufacturer  of  distilled  spirits,  manufactured 
liquors  or  wines,  fermented  liquors,  cigars,  cigarettes,  snuff,  or  other 
manufactured  tobacco  may,  without  further  payment  of  privilege 
tax,  sell  his  products  at  wholesale  and  in  the  original  packages  at 
the  place  of  manufacture,  but  not  otherwise. 

A  retail  liquor  dealer  may  without  further  payment  of  privilege 
tax  engage  in  business  as  a  retail  vino  dealer ;  and  a  retail  dealer  in 
fermented  liquors  may  without  further  payment  engage  in  business 
as  a  retail  dealer  in  tuba,  basi,  and  tapuy. 

[2657—1624.] 

SEC.  1470.  Continuation  of  business  of  deceased  person. — When 
any  individual  paying  a  business  tax  dies  and  the  same  business 
is  continued  by  the  person  or  persons  interested  in  his  estate  no 
additional  payment  shall  be  required  for  the  residue  of  the  term  for 
which  the  tax  was  paid. 

[2657—1625.] 

SEC.  1471.  Removal  of  business  to  other  location. — Any  business 
for  which  the  privilege  tax  has  been  paid  may,  subject  to  the  regula- 
tions of  the  bureau,  be  removed  and  continued  in  any  other  place  in 
the  same  municipality  without  the  payment  of  additional  tax  during 
the  term  for  which  the  payment  was  made. 

[2G57— 1626.] 

SEC.  1472.  Revocation  of  privilege. — When  a  person  doing  busi- 
ness under  the  provisions  of  this  chapter  as  a  retail  liquor  dealer, 
retail  vino  dealer,  dealer  in  fermented  liquors,  or  as  a  peddler  of 
tobacco  or  liquor,  is  abusing  his  privilege  to  the  injury  of  the  public 
morals  or  peace,  or  when  a  place  where  any  such  business  is  estab- 
lished has  been  or  is  conducted  in  a  disorderly  or  unlawful  manner, 
or  is  a  nuisance,  or  is  permitted  to  be  used  as  a  resort  for  disorderly 
characters,  criminals,  or  women  of  ill  repute,  the  collector  of  internal 
revenue  may,  after  due  investigation,  and  with  the  approval  of  the 
department  head,  revoke  such  privilege,  subject  to  appeal  to  the 
governor  general,  whose  action  on  the  appeal  shall  be  final.  Such 
revocation  shall  operate  to  forfeit  all  sums  which  may  have  been  paid 
in  respect  of  said  privilege  and  to  prohibit  the  sale,  by  the  person 
whose  privilege  is  so  revoked,  of  liquor  or  tobacco  for  a  term  which 
may  be  fixed  in  said  order. 

[2657—1627.] 


32  INTERNAL   REVENUE   LAWS. 

SEC.  1473.  Amount  of  privilege  tax  on  occupation. — Privilege  taxes 
on  occupation  shall  be  collected  as  follows,  the  amount  stated  being 
the  sum  due  for  the  whole  year : 

(a)  Customs  and  immigration  brokers,  80  pesos. 

(b)  Lawyers,   medical    practitioners,   land   surveyors,   architects, 
public  accountants,  and  civil,  electrical,  mechanical,  or  mining  en- 
gineers, 50  pesos. 

(c)  Dental    surgeons,    opticians,    photographers,    engravers,    and 
professional  appraisers  or  connoisseurs  of  tobacco  and  other  domestic 
or  foreign  products,  40  pesos. 

(d)  Procuradores  judiciales,  insurance  agents  and  subagents,  and 
veterinarians,  40  pesos. 

(e)  Pharmacists,  farriers,  chiropidists,  manicurists,  tattooers,  and 
masseurs,  20  pesos. 

(/)  Midwives  and  cirujanos  ministrantes  in  medicine  or  dentistry, 
10  pesos. 

"  Medical  practitioner "  includes  persons  engaged  in  the  practice 
of  medicine  in  other  capacity  than  that  of  cirujano  ministrante  or 
midwife  solely,  but  excluding  physicians  or  surgeons  temporarily 
called  in  consultation  from  another  country. 

[2657—1628.] 

SEC.  1474.  Exemption  of  persons  employed  by  6rovem/ment  or  cn- 
(ftrc/ed  in  n*orl'  of  charity. — No  occupation  tax  shall  be  imposed  upon 
persons  in  any  branch  of  the  service  of  the  Government  of  the 
United  States  or  of  the  Government  of  the  Philippine  Islands  whose 
entire  professional  services  are  devoted  exclusively  to  such  Govern- 
ments or  are  applied  under  their  direction,  nor  upon  persons  de- 
voting their  entire  professional  services  to  any  religious,  educational, 
or  charitable  institution,  or  hospital,  sanitarium,  or  to  any  similar 
establishment,  not  conducted  for  private  gain. 

[2657—1629.] 

SEC.  1475.  Privilege  tax  on  signs,  signboards^  and-  billboards. —  (Re- 
pealed by  sec.  1,  act  No.  2819.) 

[2657—1030.3 

SEC.  147G.  Kcmornl  of  sif/n  Inj  Crorernment. —  (Repealed  by  sec.  1, 
act  No.  2819.) 

[2657—1681.] 

SEC.  1477.  Restrictive  provisions. — (Repealed  by  sec.  1,  act  No.  2819.) 

[2(557— 1 032.] 

ARTICLE  VI. — SPECIFIC  TAXES. 

SEC.  1478.  Articles  subject  to  specific  tax. — Specific  internal-rev- 
enue taxes  apply  to  things  manufactured  or  produced  in  the  Philip- 
pine Islands  for  domestic  sale  or  consumption  and  to  things  im- 
ported from  the  United  States  or  foreign  countries,  but  not  to  any- 


INTERNAL  REVENUE  LAWS.  33 

thing  produced  or  manufactured  here  which  shall  be  removed  for 
exportation  and  is  actually  exported  without  returning  to  the  islands, 
whether  so  exported  in  its  original  state  or  as  an  ingredient  or  part 
of  any  manufactured  article  or  product. 

In  case  of  importations  the  internal-revenue  tax  shall  be  in  addi- 
tion to  the  customs  duties,  if  any. 

No  specific  tax  shall  be  collected  on  any  articles  sold  and  delivered 
directly  to  the  United  States  Army  or  Navy  for  actual  use  or  issue 
by  the  Army  or  Navy,  or  on  any  article  sold  to  the  Bureau  of  Coast 
and  Geodetic  Survey,  purchased  with  funds  furnished  by  the  Gov- 
ernment of  the  United  States,  and  any  taxes  which  have  been  paid 
on  articles  so  sold  and  delivered  for  such  use  or  issue  shall  be  re- 
funded upon  such  sale  and  delivery. 

[2657—1633.] 

SEC.  1479.  Payment  of  specific  tax  on  domestic  products. — Specific 
taxes  on  domestic  products  shall  be  paid  by  the  manufacturer,  pro- 
ducer, owner,  or  person  having  possession  of  the  same;  and  except 
as  otherwise  especially  allowed  such  taxes  shall  be  paid  immediately 
before  removal  from  the  place  of  production. 

[2657—1(334.] 

SEC.  1480.  Payment  of  specific  tax  on  imported  articles. — In- 
ternal-revenue taxes  on  imported  articles  shall  be  paid  by  the  owner 
or  importer  to  the  customs  officers,  conformably  with  regulations 
of  the  Bureau  of  Internal  Revenue  and  before  the  release  of  such 
articles  from  the  customhouse. 

[2657—1635.] 

SEC.  1481.  (As  amended  by  sec.  2,  act  2925.)  Specific  tax  on  distilled 
spirits. — Upon  distilled  spirits  there  shall  be  collected,  except  as 
hereinafter  provided,  specific  taxes  as  follows : 

(a)  If  produced  from  sap  of  the  nipa,  coconut,  or  buri  palm,  or 
from  the  juice,  sirup,  or  sugar  of  the   cane,   per  proof  liter,   38 
centavos. 

(b]  If  produced   from  any  other  material,  per  proof  liter,   80 
centavos. 

This  tax  shall  be  proportionally  increased  for  any  strength  of 
the  spirits  taxed  over  proof  spirits. 

"Distilled  spirits,"  as  here  used,  includes  all  substances  known  as 
ethyl  alcohol,  hydrated  oxide  of  ethyl,  or  spirits  of  wine,  which  are 
commonly  produced  by  the  fermentation  and  subsequent  distillation 
of  grain,  starch,  molasses,  or  sugar,  or  of  some  sirup  or  sap,  includ- 
ing all  dilutions  or  mixtures;  and  the  tax  shall  attach  to  this  sub- 
stance as  soon  as  it  is  in  existence  as  such,  whether  it  be  subsequently 
separated  as  pure  or  impure  spirits,  or  be  immediately  or  at  any  sub- 
sequent time  transferred  into  any  other  substances  either  in  process 
of  original  production  or  by  any  subsequent  process. 
52853—21 3 


34  INTERNAL   REVENUE   LAWS. 

"  Proof  spirits  "  is  liquor  containing  one-half  its  volume  of  alcohol 
of  a  specific  gravity  of  seven  thousand  nine  hundred  and  thirty-nine 
ten-thousandths  at  15°  C.  A  proof  liter  means  a  liter  of  proof 
spirits. 

[2657—1636.] 

SEC.  1482.  Mode  of  computing  contents  of  cask  or  package.— 
Every  fractional  part  of  a  proof  liter  equal  to  or  greater  than  a  half 
liter  in  a  cask  or  package  containing  more  than  1  liter  shall  be  taxed 
as  a  liter,  and  any  smaller  fractional  part  shall  be  exempt;  but  any 
package  of  spirits  the  total  contents  of  which  are  less  than  a  proof 
liter  shall  be  taxed  as  1  liter. 

[2657—1637.] 

SEC.  1483.  Tax  on  preparations  containing  distilled  spirits  as  chief 
ingredient. — Medicinal  and  toilet  preparations,  flavoring  extracts, 
and  all  other  preparations,  of  which,  excluding  the  water,  distilled 
spirits  form  the  chief  ingredient,  shall  be  subject  to  the  same  tax  as 
such  chief  ingredient. 

Upon  permit  from  the  collector  of  internal  revenue  and  subject  to 
the  regulations  of  the  bureau,  manufacturers  of  cigars  may  withdraw 
from  bond  free  of  tax  imported  wine  in  specified  quantities  and 
grades  for  use  in  the  treatment  of  tobacco  leaf  to  be  used  in  the 
manufacture  of  cigars ;  but  such  wine  must  first  be  suitably  denatured. 

[2657—1638.] 

SEC.  1484.  Exemption  in  favor  of  domestic  denatured  alcohol. — 
Domestic  alcohol  of  not  less  than  180°  proof  (90  per  centum  absolute 
alcohol)  may,  when  denatured,  be  withdrawn  from  a  registered  dis- 
tillery or  bonded  warehouse  without  the  payment  of  the  specific  tax 
prescribed  in  section  1481  hereof,  for  the  purpose  of  being  used  for 
fuel,  light,  or  power,  or  for  use  generally  in  the  arts  and  industries. 

[2657—1639.] 

SEC.  1485.  (As  amended  by  act  No.  2733.)  Removal  of  spirits  or 
cigars  under  ~bond. — Spirits  requiring  rectification  may  be  removed 
from  the  place  of  their  manufacture  to  some  other  establishment  for 
the  purpose  of  rectification  without  the  prepayment  of  the  specific 
tax,  provided  the  distiller  removing  such  spirits  and  the  rectifier 
receiving  them  shall  file  with  the  collector  of  internal  revenue  their 
joint  bond  conditioned  for  the  future  payment  by  the  rectifier  of  the 
specific  tax  that  may  be  due  on  any  finished  product,  and  cigars  may 
be  removed  by  a  manufacturer  of  tobacco  products  owning  and 
operating  a  branch  factory  separate  from  his  principal  factory,  from 
the  branch  factory  to  the  principal  factory,  for  exportation,  without 
the  prepayment  of  the  specific  tax,  provided  the  manufacturer  shall 
file  with  the  collector  of  internal  revenue  his  bond  conditioned  for 


,  INTERNAL   REVENUE   LAWS.  35 

the  future  payment  of  the  specific  tax  that  may  be  due  on  the  finished 
product. 

[2657—1640.] 

SEC.  I486.   (As  amended  by  sec.  3,  act  2925.)  /Specific  tax  on  wines.— 
On  wines  and  imitation  wines  there  shall  be  collected,  per  liter  ~of" 
volume  capacity  regardless  of  proof,  the  following  taxes : 

(a)  Sparkling  wines,  1  peso  and  60  centavos. 

(b)  Still  wines  containing  14  per  centum  of  alcohol  or  less,  20 
centavos. 

(c)  Still  wines  containing  more  than  14  per  centum  of  alcohol, 
40  centavos. 

Imitation  wines  containing  more  than  25  per  centum  of  alcohol 
shall  be  taxed  as  distilled  spirits. 

[2657—1641.] 

SEC.  1487.  (As  amended  by  sec.  4,  act  2925.)  Specific  tax  on  fer- 
mented liquors. — On  beer,  lager  beer,  ale,  porter,  and  other  fermented 
liquors  (except  tuba,  basi,  tapuy,  and  similar  domestic  fermented 
liquors)  there  shall  be  collected,  on  each  liter  of  volume  capacity,  10 
centavos. 

[2657—1642.] 

SEC.  1488.  Removal  of  fermented  liquors  to  bonded  warehouse. — 
Any  brewer  may  remove  or  transport  or  cause  to  be  removed  or  trans- 
ported from  his  brewery  or  other  place  of  manufacture  to  a  bonded 
warehouse,  used  by  him  exclusively  for  the  storage  or  sale  in  bulk  of 
fermented  liquor  of  his  own  manufacture,  any  quantities  of  such  fer- 
mented liquors  not  less  than  1,000  liters  at  one  removal,  without  pay- 
ing the  tax  thereon  at  the  time  of  removal  from  the  place  of  manu- 
facture, under  a  permit  which  shall  be  granted  by  the  collector  of 
internal  revenue ;  and  thereafter  the  manufacturer  of  such  fermented 
liquor  shall  pay  the  tax  in  the  same  manner  and  under  the  same  pen- 
alty and  liability  as  when  paid  at  the  brewery.  Such  permits  shall 
be  affixed  to  every  package  so  removed,  and  shall  be  canceled  or  de- 
stroyed in  such  manner  as  the  collector  of  internal  revenue  may  pre- 
scribe. 

[2657—1643.] 

SEC.  1489.  Removal  of  damaged  liquors  free  of  tax. — When  any 
fermented  liquor  has  become  sour  or  otherwise  damaged  so  as  to 
be  unfit  for  use  as  such,  brewers  may  sell  and,  after  securing  a  special 
permit  from  the  collector  of  internal  revenue  and  under  the  regula- 
tions of  the  bureau,  remove  the  same  without  the  payment  of  the 
tax  thereon  to  any  place  where  such  liquor  is  to  be  used  for  manu- 
facturing purposes,  in  casks  or  other  packages,  unlike  those  ordi- 


36  INTEBNAL   BE  VENUE   LAWS. 

narily  used  for  fermented  liquors,  containing  each  not  less  than 
175  liters  and  having  a  note  of  their  contents  marked  thereon. 

[2657—1644.] 

SEC.  1490.  /Specific  tax  on  products  of  tobacco. — On  manufactured 
products  of  tobacco,  except  cigars,  cigarettes,  and  tobacco  specially 
prepared  for  chewing  so  as  to  be  unsuitable  for  consumption  in  any 
other  manner,  but  including  all  other  tobacco  twisted  by  hand  or 
reduced  into  a  condition  to  be  consumed  in  any  manner  other  than 
by  the  ordinary  mode  of  drying  and  curing ;  and  on  all  tobacco  pre- 
pared or  partially  prepared  for  sale  or  consumption*  even  if  prepared 
without  the  use  of  an}'  machine  or  instrument  and  without  being 
pressed  or  sweetened;  and  on  all  fine-cut  shorts  and  refuse,  scraps, 
clippings,  cuttings,  and  sweepings  of  tobacco,  there  shall  be  collected, 
on  each  kilogram,  60  centavos. 

On  tobacco  specially  prepared  for  chewing  so  as  to  be  unsuitable 
for  use  in  any  other  manner,  on  each  kilogram,  48  centavos. 

[2657—1645.] 

SEC.  1491.  (As  amended  by  act  No.  2733.)  Rents* ml  of  tol><i<--<:o  prod- 
ucts without  prepayment  of  tax. — Products  of  tobacco  entirely  unfit 
for  chewing  or  smoking  may  be  removed  free  of  tax  for  agricultural 
or  industrial  use,  under  such  conditions  as  may  be  prescribed  in  the 
regulations  of  the  bureau ;  and  stemmed  leaf  tobacco,  fine-cut  shorts, 
the  refuse  of  fine-cut  chewing  tobacco,  refuse,  scraps,  cuttings,  clip- 
pings, and  sweepings  of  tobacco  may  be  sold  in  bulk  as  raw  material 
by  one  manufacturer  directly  to  another,  under  such  conditions  as 
may  be  prescribed  in  the  regulations  of  the  bureau,  without  the 
prepayment  of  the  tax. 

"  Stemmed  leaf  tobacco,"  as  herein  used,  means  leaf  tobacco  which 
has  had  the  stem  or  midrib  removed.  The  term  does  not  include 
broken  leaf  tobacco. 

[2657—1646.] 

SEC.  1492.  (As  amended  by  sec.  3,  act  No.2733,and  sec.  6,  act  No.  2835.) 
Specific  tax  on  cigars  and  cigarettes. — On  cigars  and  cigarettes  (ex- 
cept handmade  cigars  and  cigarettes  prepared  by  the  consumer  for 
his  own  consumption  and  so  used)  there  shall  be  collected  the  follow- 
ing taxes : 

(a)  Cigars: 

1.  When  the  manufacturer's  or  importer's  wholesale  price,  less  the 
amount  of  the  tax,  is  30  pesos  per  thousand,  or  less,  on  each  thousand, 
2  pesos. 

2.  When  the  manufacturer's  or  importer's  wholesale  price,  less  the 
amount  of  the  tax,  is  more  than  30  pesos  but  not  more  than  60  pesos 
per  thousand,  on  each  thousand,  4  pesos. 


INTERNAL,  REVENUE  LAWS.  37 

When  the  manufacturer's  or  importer's  wholesale  price,  less  the 
tount  of  the  tax,  exceeds  60  pesos  per  thousand,  on  each  thousand, 
6  pesos. 

(b)   Cigarettes: 

1.  When  the  manufacturer's  or  importer's  wholesale  price,  less  the 
amount  of  the  tax,  is  4  pesos  or  less  per  thousand,  on  each  thousand, 
1  peso  and  20  centavos. 

2.  When  the  manufacturer's  or  importer's  wholesale  price,  less  the 
amount  of  the  tax,  is  more  than  4  pesos  but  not  more  than  6  pesos 
per  thousand,  on  each  thousand,  1  peso  and  60  centavos. 

3.  When  the  manufacturer's  or  importer's  wholesale  price,  less  the 
tax,  exceeds  6  pesos  per  thousand,  on  each  thousand,  2  pesos. 

The  maximum  price  at  which  the  various  classes  of  cigars  and 
cigarettes  are  sold  at  wholesale  in  the  factory  or  in  the  establishment 
of  the  importer  to  any  member  of  the  public  shall  determine  the  rate 
of  the  tax  applicable  to  such  cigars  and  cigarettes ;  and  if  the  manu- 
facturer or  importer  also  sells,  or  allows  to  be  sold,  his  cigars  and 
cigarettes  at  wholesale  in  another  establishment  of  which  he  is  the 
owner  or  in  the  profits  of  which  he  has  an  interest,  the  maximum  sale 
price  in  such  establishment  shall  determine  the  rate  of  the  tax  appli- 
cable to  the  cigars  and  cigarettes  therein  sold. 

Every  manufacturer  or  importer  of  cigars  and  cigarettes  shall  file 
with  the  collector  of  internal  revenue,  on  the  date  or  dates  desig- 
nated by  the  latter,  a  sworn  statement  of  the  maximum  wholesale 
prices  of  cigars  and  cigarettes,  and  it  shall  be  unlawful  to  sell  said 
cigars  and  cigarettes  at  wholesale  at  a  price  in  excess  of  the  one 
specified  in  the  statement  required  by  this  law  without  previous 
written  notice  to  said  collector  of  internal  revenue. 

[2057—1647.] 

SEC.  1493.  (As  amended  by  act  No.  2775.)  /Specific  tax  on  matches. — 
On  matches  there  shall  be  collected — 

(a)  On  each  gross  of  boxes  containing  not  more  than  80  sticks  to 
the  box,  40  centavos. 

(b]  On  each  gross  of  boxes  containing  over  80  sticks  to  the  box, 
a  proportionate  additional  tax. 

[2657—1648.] 

SEC.  1494.  Tax  on  skimmed  milk. — Upon  all  condensed  skimmed 
milk  and  upon  all  skimmed  milk,  in  whatever  form,  from  which  the 
cream  has  been  removed  entirely  or  in  part,  sold  in  the  Philippine 
Islands,  there  shall  be  collected  for  each  kilogram  of  the  gross  weight 
of  said  milk  and  containers,  20  centavos. 

[2657—1649.] 


38  INTERNAL   REVENUE   LAWS. 

SEC.  1495.  Specific  tax  on  manufactured  oils. — On  refined  and 
manufactured  mineral  oils  there  shall  be  collected  the  following 
taxes : 

(1)  Naphtha,  gasoline,  and  all  other  lighter  products  of  distilla- 
tion, per  liter  of  volume  capacity,  3  centavos. 

(2)  Kerosene  or  petroleum,  per  liter  of  volume  capacity,  1J  cen- 
tavos. 

(3)  Lubricating  oils,  per  liter  of  volume  capacity,  3  centavos. 
[2657—1650.] 

SEC.  1496.  Tax  on  coal. — On  all  coal  and  coke  there  shall  be  col- 
lected, per  metric  ton,  50  centavos. 

[2657—1651.] 

SEC.  1497.  Tax  on  'cinematograpMc  films. — There  shall  be  col- 
lected, once  only,  upon  each  cinematographic  film  imported  or 
manufactured  in  the  Philippine  Islands  a  tax  of  3  centavos  per 
linear  meter.  This  tax  shall  not  be  collected  on  any  cinemato- 
graphic film  the  tax  on  which  has  been  paid  and  which  is  subse- 
quently returned  to  the  Philippine  Islands,  nor  on  any  negative  film 
or  unprinted  positive  film,  and  any  taxes  heretofore  paid  on  cinema- 
tographic films  so  returned  or  on  negative  films  or  unprinted  posi- 
tive films  shall  be  refunded  in  case  such  refund  has  not  yet  been 
made. 

[2657—1652.] 

SEC.  1498.  (As  amended  by  sec.  7,  act  l^o.  2835.)  TO.V  on  playing 
cards. —  (1)  On  each  pack  of  cards  containing  not  more  than  58 
cards  there  shall  be  collected  a  tax  of  30  centavos. 

(2)  On  each  pack  containing  more  than  58  cards  there  shall  be 
collected  the  tax  established  in  the  last  preceding  paragraph  and  a 
proportionate  additional  tax  on  the  number  in  excess  of  ."?S. 

[2657—1653.] 

ARTICLE  VII. — TAXES  ON  RESOURCES  OF  BANKS,  KECEIPTS  OF  INSUR- 
ANCE COMPANIES,  AND  RECEIPTS  or  CORPORATIONS  PAYING  FRAN- 
CHISE TAX. 

SEC.  1499.  Tax  on  capital*  deposits*  and  circulation  of  banks. — 
Subject  to  the  exemptions  herein  made  there  shall  be  collected  from 
banks  the  following  taxes  on  capital,  deposits,  and  circulation  : 

(a)  Upon  the  capital  employed  by  the  bank,  for  each  month,  one 
twenty-fourth  of  1  per  centum. 

(5)  Upon  the  average  amount  of  deposits  of  money,  subject  to 
payment  by  check  or  draft,  or  represented  by  certificates  of  deposit 
or  otherwise,  whether  payable  on  demand  or  at  some  future  day,  for 
each  month,  one-eighteenth  of  1  per  centum. 


INTERNAL   REVENUE   LAWS.  39 

(c)  Upon  the  average  amount  of  circulation  issued  by  the  bank, 
including  as  circulation  all  notes  and  other  obligations  calculated  or 
intended  to  circulate  or  be  used  as  money,  but  not  including  such  as 
may  be  retained  in  the  vault  of  the  bank  or  redeemed  and  on  deposit 
for  said  bank,  for  each  month,  one-twelfth  of  1  per  centum. 

(d)  Upon  the  average  amount  of  such  circulation  issued  as  above, 
being  beyond  the  amount  of  the  paid-in  capital  of  the  bank,  for  each 
month,  and  as  an  additional  tax,  1  per  centum. 

"  Bank,"  as  herein  used,  includes  every  incorporated  or  other  bank, 
and  every  person,  association,  or  company  having  a  place  of  business 
where  credits  are  opened  by  the  deposit  or  collection  of  money  or 
currency  subject  to  be  paid  or  remitted  upon  draft,  check,  or  order, 
or  where  money  is  advanced  or  loaned  on  stocks,  bonds,  bullion,  bills 
of  exchange,  or  promissory  notes  are  received  for  discount  or  for 
sale. 

"  Capital  employed  "  does  not  include  money  borrowed  or  received 
from  time  to  time  in  the  usual  course  of  business  from  any  person 
not  a  partner  of  or  interested  in  such  bank ;  and  no  tax  shall  be  im- 
posed on  the  capital  employed  by  any  person  whose  sole  business  is 
lending  money  on  real-estate  security. 

[2657—1654.] 

SEC.  1500.  Time  for  payinent  of  tax — Increase  of  tax  in  case  of 
delinquency. — These  taxes  shall  be  due  at  intervals  of  six  months — 
namely,  on  the  1st  of  January  and  July  for  the  respective  preced- 
ing half-year  periods ;  and  if  any  such  tax  remains  unpaid  for  four 
months  thereafter  the  amount  of  the  tax  shall  be  increased  by  25 
per  centum,  the  increment  to  be  a  part  of  the  tax. 

[2657—1655.1 

SEC.  1501.  Banker's  semiannual  report  of  business  done. — A  report 
of  the  monthly  amount  of  capital,  deposits,  and  circulation  shall  be 
rendered  on  or  before  the  first  of  May  and  first  of  November  of  each 
year  by  each  bank  subject  to  the  tax  above  prescribed,  with  a  declara- 
tion annexed  thereto  under  oath  of  the  president,  cashier,  manager, 
or  proprietor  to  the  effect  that  such  report  contains  a  true,  faithful, 
and  correct  statement  of  the  amounts  subject  to  tax  as  aforesaid  for 
the  period  therein  covered. 

[2657—1656.]  / 

SEC.  1502.  Computing  resources  of  bank  incorporated  abroad. — 
The  amount  of  capital  used  by  a  bank  within  the  Philippine  Islands, 
when  such  bank  is  a  branch  of  a  bank  incorporated  under  laws 
of  the  United  States  or  a  foreign  country,  shall,  for  the  purposes 
of  assessment  hereunder,  be  determined  in  the  following  manner: 
The  total  amount  of  the  capital  of  the  bank  shall  be  ascertained,  and, 
likewise,  the  total  amount  of  the  net  earnings  of  the  bank  accruing 


40  INTERNAL   REVENUE   LAWS. 

during  the  preceding  six  months,  and  also  the  total  amount  of  the 
net  earnings  accruing  from  the  bank's  business  conducted  in  the 
Philippine  Islands ;  and  such  a  proportion  of  the  total  capital  of  the 
bank  shall  be  deemed  to  have  been  employed  in  the  Philippine 
Islands  as  the  net  earnings  in  the  Philippine  Islands  bear  to  the  total 
net  earnings  of  the  bank. 

[2657—1657.] 

SEC.  1503.  Exemption  of  savings  institutions. — The  deposits  in 
associations  or  companies  known  as  provident  institutions,  savings 
banks,  savings  funds,  or  savings  institutions,  having  no  capital  stock 
and  which  do  no  other  business  than  receiving  deposits  to  be  loaned 
or  invested  for  the  sole  benefit  of  the  parties  making  such  deposits 
and  without  profit  or  compensation  to  the  association  or  company, 
shall  be  exempt  from  this  tax  on  so  much  of  their  deposits  as  such 
institutions  have  invested  in  securities  satisfactory  to  the  insular 
treasurer  and  on  all  deposits,  not  exceeding  4,000  pesos,  made  in  the 
name  of  any  one  person. 

[2657—1658.] 

SEC.  1504.  Exemption  in  case  of  reduced  circulation. — When  the 
outstanding  circulation  of  any  bank  is  reduced  to  an  amount  not 
exceeding  5  per  centum  of  the  chartered  or  declared  capital  existing 
at  the  time  the  same  was  issued,  such  circulation  shall  be  free  from 
taxation ;  and  when  any  bank  which  has  ceased  to  issue  notes  for  cir- 
culation deposits  with  the  insular  treasurer,  in  lawful  money,  the 
amount  of  its  outstanding  circulation  to  be  redeemed  at  par,  under 
such  regulations  as  the  insular  treasurer  may  prescribe,  it  shall  be 
exempt  from  any  tax  upon  said  circulation. 

[2657—1659.] 

SEC.  1505.  Tax  on  insurance  premiums. — There  shall  be  collected 
from  every  person,  company,  or  corporation  (except  purely  coopera- 
tive companies  or  associations)  doing  insurance  business  of  any  sort 
in  the  Philippine  Islands  a  tax  of  1  per  centum  of  the  total  premiums 
collected  during  each  calendar  year,  whether  paid  in  money,  notes, 
credits,  or  any  substitute  for  money,  but  premiums  refunded  within 
six  months  after  payment  on  account  of  rejection  of  risk  or  returned 
for  other  reason  to  person  insured  shall  not  be  included  in  the 
taxable  receipts;  nor  shall  any  tax  be  paid  upon  reinsurance  by  a 
company  that  has  already  paid  the  tax. 

"  Cooperative  companies  or  associations "  are  such  as  are  con- 
ducted by  the  members  thereof  with  money  collected  from  among 
themselves  and  solely  for  their  own  protection  and  not  for  profit. 

[2657—1660.] 

SEC.  1506.  Time  for  payment  of  tax — Increase  of  tax  in  case  of 
delinquency. — The  tax  on  insurance  companies  shall  be  due  on  the 
1st  of  July  in  each  year  for  the  preceding  calendar  year,  and  if 


INTERNAL   REVENUE   LAWS.  41 

te  same  remains  unpaid  for  15  days  thereafter  the  amount  of  the 
tax  shall  be  increased  by  25  per  centum,  the  increment  to  be  a  part 
of  the  tax. 

[2657—1661.] 

SEC.  1507.  Yearly  report  from  insurance  company. — Every  com- 
pany liable  to  the  payment  of  the  aforesaid  tax  shall,  on  or  before 
the  1st  day  of  April  in  each  year,  render  a  statement  in  writing,  in 
such  form  as  the  collector  of  internal  revenue  shall  prescribe,  con- 
taining an  account  of  the  conditions  of  its  business  during  the  calen- 
dar year  last  preceding,  the  entire  amount  of  all  premiums  and  other 
considerations  received  during  such  year,  and  such  additional  infor- 
mation as  the  collector  may  require. 

[2657—1662.] 

SEC.  1508.  Tax  on  corporate  franchises. — There  shall  be  collected 
in  respect  to  all  existing  and  future  franchises,  upoft  the  gross  earn- 
ings or  receipts  from  the  business  covered  by  the  law  granting  the 
franchise,  such  taxes,  charges,  and  percentages  as  are  specified  in  the 
special  charters  of  the  corporations  upon  whom  such  franchises  are 
conferred,  and  for  the  purpose  of  facilitating  the  assessment  of  this 
tax  reports  shall  be  made  by  the  respective  holders  of  the  franchises 
in  such  form  and  at  such  times  as  shall  be  required  by  the  regulations 
of  the  Bureau  of  Internal  Revenue. 

The  taxes,  charges,  and  percentages  on  corporate  franchises  shall 
be  due  and  payable  as  specified  in  the  particular  franchise,  or,  in 
case  no  time  limit  is  specified  therein,  the  provisions  of  section  1455 
of  this  chapter  shall  apply ;  and  if  such  taxes,  charges,  and  percent- 
ages remain  unpaid  for  15  days  from  and  after  the  date  on  which 
they  must  be  paid,  25  per  centum  shall  be  added  to  the  amount  of 
such  taxes,  charges,  and  percentages,  which  increase  shall  form  part 
of  the  tax. 

[2657—1663.] 

ARTICLE  VIII. — CHARGES  FOR  FOREST  PRODUCTS. 

SEC.  1509.  Measuring  of  forest  products  and  collection  of  charges 
thereon. — The  duties  incident  to  the  measuring  of  forest  products 
and  the  collection  of  the  charges  thereon  shall  be  discharged  by  the 
Bureau  of  Internal  Revenue,  under  the  regulations  of  said  bureau. 

Employees  of  the  Bureau  of  Forestry  may  be  deputized  by  the 
collector  of  internal  revenue  for  the  performance  of  duties  incident 
to  the  measuring  and  invoicing  of  forest  products  when  the  director 
of  forestry  deems  such  course  advisable  for  the  protection  of  the 
forest  revenues  and  is  willing  to  supply  the  services  of  such  employees 
at  the  expense  of  the  Bureau  of  Forestry. 

[2657—1664.] 


42  INTERNAL   REVENUE   LAWS. 

SEC.  1510.  Mode  of  measuring  timber. — Except  as  hereinbelow 
provided,  all  timber  shall  be  measured  and  manifested  in  the  round 
or  squared,  before  being  sawn  or  manufactured.  The  volume  of  all 
round  timber  shall  be  ascertained  by  multiplying  the  area  of  the 
small  end  by  the  length  of  the  log,  the  diameter  of  the  log  to  be 
measured  exclusive  of  the  bark ;  but  if  the  end  of  a  log  is  irregular, 
the  average  diameter  shall  be  used;  and  in  order  to  ascertain  the 
volume  of  a  log  more  than  8  meters  long,  the  diameter  of  the  middle 
of  said  log,  or  the  average  of  the  diameters  at  both  ends  thereof  shall 
be  used  as  basis.  If  a  log  in  the  round,  cut  under  license,  is  measured 
and  manifested  by  forest  officers,  the  director  of  forestry  shall  make 
due  allowance  for  rot,  cavities,  or  other  natural  defects;  but  from 
any  decision  of  the  director  of  forestry  in  this  respect  an  appeal 
shall  lie  to  his  department  head,  whose  decision  shall  be  final.  The 
manifest  of  timber  cut  by  licensees  operating  sawmills  in  or  near  the 
forest  shall  be  attested  by  forest  officers  whenever  practicable. 

Licensees  with  sawmills  may  measure  their  timber  or  cause  or 
allow  the  same  to  be  measured  after  it  is  sawn,  provided  they  pay  for 
each  thousand  board  feet  of  lumber  of  the  first  and  second  groups  a 
sum  of  not  less  than  10  pesos,  and  of  the  other  groups  of  not  less  than 
5  pesos,  as  forestry  charges,  in  the  discretion  of  the  director  of  for- 
estry and  after  agreement  with  the  same,  with  the  approval  of  his 
department  head.  These  agreements  shall  be  for  one  year,  but  shall 
be  subject  to  renewal. 

The  volume  of  squared  timber  shall  be  ascertained  by  multiplying 
the  average  of  the  cross  section  measured  by  the  length,  to  which 
25  per  centum  shall  be  added  for  loss  in  squaring.  The  privilege  of 
manifesting  timber  after  squaring  shall,  however,  be  granted  only  to 
licensees  who  have  squared  their  logs  in  the  forest  with  the  ax  and 
intend  to  take  it  to  the  market  in  this  form. 

If  sawn  or  otherwise  manufactured  timber  is  found  which  has  not 
been  manifested  in  accordance  with  the  provisions  hereof,  the  corre- 
sponding forest  rharges  will  be  assessed  on  twice  the  volume  of  the 
actual  contents  of  such  sawn  or  manufactured  timber. 

[2657—1665.] 

SEC.  1511.  Charges  for  timber  cut  in  public  forests. — Except  as 
otherwise  specially  provided,  the  following  charges  shall  be  made 
for  each  cubic  meter  of  timber  cut  in  any  public  forest  or  forest  re- 
serve in  the  Philippine  Islands  whether  removed  therefrom  or  not : 

(a)  On  timber  in  the  first  group,  not  including  ebony  and  camagon 
stripped  of  sapwood,  2  pesos  and  50  centavos. 

(£>)   On  ebony  stripped  of  sapwood,  6  pesos. 

(c)  On  camagon  stripped  of  sapwood,  4  pesos  and  50  centavos. 

(d)  On  timber  in  the  second  group,  1  peso  and  50  centavos. 


INTERNAL   REVENUE   LAWS.  43 

(e)   On  timber  in  the  third  group,  not  including  firewood,  1  peso. 

(/)  On  timber  in  the  fourth  group,  not  including  firewood,  50 
centavos. 

[2657—1666.] 

SEC.  1512.  Charges  for  -firewood  cut  in  public  forests. — For  fire- 
wood cut  in  public  forests  and  forest  reserves  the  following  charges 
shall  be  made : 

For  bacauan  and  tangal,  per  cubic  meter,  20  centavos. 

For  other  woods,  per  cubic  meter,  10  centavos. 

Only  third  or  fourth  group  wood  can  be  taken  for  firewood,  ex- 
cept at  the  discretion  of  the  director  of  forestry  first  and  second 
group  woods  may  be  removed  for  firewood  purposes  from  land  which 
is  more  valuable  for  agricultural  than  for  forest  purposes. 

[2657—1667.] 

SEC.  1513.  Charges  collectible  for  wood  cut  from  unregistered  pri- 
vate lands. — The  charges  above  proscribed  shall  be  collected  for  all 
wood  cut  upon  any  land  the  title  to  which  is  not  registered  with  the 
director  of  forestry  as  required  by  the  forest  law;  and  in  the  absence 
of  such  registration  wood  cut  and  removed  from  alleged  private 
hinds  shall  be  considered  as  cut  and  removed  under  license  from 
public  forests  or  forest  reserves,  and  shall  be  subject  to  the  law  and 
regulations  in  such  case  applicable. 

[2657—1668.] 

SEC.  1514.  Surcharge  for  illegal  cutting  and  removal  of  forest 
lucts  or  for  delinquency. — Where  forest  products  are  unlawfully 
cut  or  gathered  in  any  public  forest  without  license  or,  if  under 
license,  in  violation  of  the  terms  thereof,  the  charges  for  such  prod- 
ucts shall  be  doubled.  If  any  such  products  be  removed  without 
invoice,  or  upon  removal  be  discharged  without  permit  from  boat, 
oar.  cart,  or  other  means  of  transportation,  the  charges  shall  be  in- 
creased by  50  per  cent;  and  if,  in  any  case,  the  proper  charges  upon 
forest  products  be  not  paid  within  30  days  after  the  same  shall  be 
due.  and  payable,  such  charges  shall  be  increased  by  50  per  cent. 

IU6.7T— 3669.] 

SEC.  1515.  (  harge  for  timber  cut  for  use  on  mining  claim. — When 
a  license  is  granted  by  the  Bureau  of  Forestry  allowing  a  miner  or 
mining  company  to  cut  timber  for  the  development  of  a  mining 
claim  on  land  other  than  such  as  is  covered  by  his  claim,  the  charges 
for  timber  so  cut  shall  be  one-half  the  prices  hereinabove  fixed. 

12057— 1670.] 

SEC.  1516.  Charges  for  gums,  resins,  and  other  forest  products. — 
On  gums,  resins,  rattan,  and  other  products  of  the  forest  gathered 
or  removed  from  an}^  public  forest  or  forest  reserve,  and  not  herein- 
above  provided  for,  there  shall  be  paid  on  the  market  value  thereof, 
determined  in  the  manner  indicated  below,  a  charge  of  10  per  cent. 


44  INTERNAL   REVENUE   LAWS. 

The  market  value  of  the  various  forest  products  for  which  charges- 
may  thus  be  made  shall  be  determined  from  time  to  time  by  a  joint 
assessment  of  the  collector  of  internal  revenue  and  director  of 
forestry,  the  same  to  be  published  for  the  information  of  the  public 
in  the  official  gazette.  Where  the  value  of  any  forest  product  in- 
cluded in  this  section  is  not  determined  and  published  in  the  manner 
specified,  such  product  may  be  taken  free  of  charge. 

[2657—1671.] 

SEC.  1517.  (As  amended  by  sec.  8,  act  No.  2835.)  Charges  for  stone, 
earth,  salt  and  guano  taken  from  lands  under  the  jurisdiction  of  the 
Bureau  of  Forestry. — For  stone,  earth,  salt,  or  guano  taken  from  the 
lands  under  the  jurisdiction  of  the  Bureau  of  Forestry  such  charges 
shall  be  made  as  may  be  fixed  in  particular  cases  by  the  director  of 
forestry,  with  the  approval  of  the  department  head. 

[2657—1672.] 

SEC.  1518.  No  charge  for  products  lawfully  removed  under  gratui- 
tous license. — No  charge  shall  be  made  oh  forest  products  removed 
in  conformity  with  the  terms  of  a  gratuitous  license  of  the  Bureau 
of  Forestry  and  in  compliance  with  the  law  and  the  regulations  of 
such  bureau. 

[2657—1673.] 

SEC.  1519.  Gratuitous  licensees  subject  to  regulations  of  Bureau  of 
Internal  Revenue. — Gratuitous  licensees  to  cut  first-group  timber 
under  license  from  the  Bureau  of  Forestry  must  comply  with  the 
regulations  of  the  Bureau  of  Internal  Revenue  in  regard  to  the  re- 
moval of  such  timber,  and  shall  submit  on  the  proper  forms  full  in- 
voices showing  the  amount  cut  by  them. 

[2657—1674.] 

SEC.  1520.  (As  amended  by  sec.  9,  act  No.  2835.)  Time  for  payment 
of  forest  charges. — Except  as  herein  below  provided,  the  charges  for 
forest  products  shall  be  payable  at  the  time  of  the  removal  of  the 
same  from  the  forest. 

With  the  approval  of  the  collector  of  internal  revenue,  lumber  may 
be  removed  from  a  sawmill  situated  on  a  licensed  cutting  area  upon 
the  giving  of  a  bond  conditioned  for  the  monthly  payment  of  the 
charges  due  upon  the  output  of  such  mill.  He  may  also  authorize 
the  shipment  of  forest  products  under  auxiliary  invoices  without  the 
prepayment  of  charges,  in  special  cases  where  the  payment  of  the 
charges  at  the  point  of  origin  would  work  a  great  hardship  and  the 
proper  charges  are  secured  by  proper  bonds. 

[2657—1675.] 


INTERNAL   REVENUE   LAWS.  45 

.KTICLE  IX. — TESTING  AND  SEALING  or  WEIGHTS  AND  MEASURES. 

SEC.  1521.  Sealing  and  licensing  of  weights  and  measures. — The 
duties  incident  to  the  official  inspection  of  weights  and  measures,  and 
the  sealing  and  licensing  of  the  same  for  use,  shall  be  performed 
under  the  supervision  of  the  bureau  of  internal  revenue. 

[2657—1676.] 

SEC.  1522.  Fees  for  sealing  linear  metric  measures. — Fees  for 
sealing  linear  measures  of  the  metric  system  shall  be  as  follows: 

(a)  Measures  not  over  one  and  one-half  meters,  10  centavos. 

(b)  Measures  over  one  and  one-half  meters,  20  centavos. 
[20157— 1677.] 

SEC.  1523.  Fees  for  sealing  English  linear  measures. — Fees  for 
sealing  linear  measures  of  the  English  system,  allowable  only  when 
such  measures  are  to  be  used  in  measuring  manufactured  lumber, 
shall  be  as  follows : 

(a)   Measures  not  over  1  yard,  10  centavos. 

(,7;)   Measures  over  1  3^ard,  20  centavos. 

[2657—1678.] 

SEC.  1524.  Fees  for  sealing  metric  measures  of  capacity. — Fees 
for  sealing  metric  measures  of  capacity  shall  be  as  follows : 

(a)   For  a  measure  not  over  10  liters,  20  centavos. 

(&)  For  a  measure  over  10  liters,  30  centavos. 

[2657—1679.] 

SEC.  1525.  Fees  for  sealing  metric  instruments  of  weight. — Fees 
for  sealing  instruments  for  determining  weight  graduated  solely  in 
the  metric  system  shall  be  as  follows : 

(a)  Those  having  a  capacity  of  over  3,000  kilograms,  3  pesos. 

(b)  Those  having  a  capacity  of  not  over  3,000  but  over  300  kilo- 
grams, 1  peso  and  20  centavos. 

(c)  Those  having  a  capacity  of  not  over  300  but  more  than  30 
kilograms,  60  centavos. 

(d)  Those   with   a   capacity  not  greater  than  30  kilograms,   30 
centavos. 

For  an  apothecary  balance  or  other  balance  of  precision  the 
charge  shall  be  doubled. 

With  each  scale  or  balance  a  complete  set  of  weights  for  use  there- 
with shall  be  sealed  free  of  charge.  For  each  extra  weight  the 
charge  shall  be  5  centavos. 

[2657—1680.] 

SEC.  1526.  Form  and  duration  of  license  for  use  of  weights  and 
measures. — The  receipt  for  the  fee  charged  for  the  sealing  of  weights 
and  measures  shall  serve  as  a  license  to  use  such  instrument  for  one 
year  from  the  date  of  sealing,  unless  deterioration  or  damage  occurs 
in  that  period  which  renders  the  weight  or  measure  inaccurate. 


46  INTERNAL   REVENUE   LAWS. 

Such  receipt  shall  be  preserved  by  the  owner  and  shall  be  exhibited 
on  demand  of  any  internal- re  venue  officer. 

[2657—1681.] 

SEC  1527.  Secondary  standards  preserved  J)y  provincial  treasurers 
— Testing  of  same. — For  use  in  the  testing  of  weights  and  measures  in 
the  provinces,  provincial  treasurers  shall  keep  full  sets  of  secondary 
standards  in  the  provincial  buildings.  The  collector  of  internal 
revenue  shall  be  responsible  for  the  inspection  and  proper  testing  of 
all  provincial  and  municipal  standards  of  weight  and  measure. 

[2G57— 1682.] 

SEC.  1528.  Comparison  of  secondary  and  fundamental  standards. 
— The  comparison  of  the  secondary  and  fundamental  standards  shall 
be  made  in  the  Bureau  of  Science  at  the  instance  of  the  collector  of 
internal  revenue.  When  found  to  be  sufficiently  accurate  the  sec- 
ondary standard  shall  be  distinguished  by  a  label,  tag,  or  seal,  and 
shall  be  accompanied  by  a  certificate  showing  the  amount  of  its 
variation  from  the  fundamental  standard.  If  the  variation  is  of 
sufficient  magnitude  to  impair  the  utility  of  the  instrument,  it  shall 
be  destroyed  in  the  Bureau  of  Science. 

[2657—1683.] 

SEC.  1529.  Inspectors  of  weights  and  measures. — Internal-revenue 
agents  shall  inspect  and  test  balances  or  scales,  weights,  and  meas- 
ures, and  report  upon  the  condition  thereof  in  the  territory  assigned 
to  them.  It  shall  be  their  duty  to  collect  evidence  of  infringements 
of  the  law  or  of  fraud  in  the  use  of  weights  and  measures  or  of 
neglect  of  duty  on  the  part  of  any  officer  engaged  in  sealing  weights 
and  measures.  Evidence  so  collected  by  them  shall  be  presented 
forthwith  to  the  collector  of  internal  revenue  and  also  to  the  proper 
prosecuting  officer. 

[2657—1684.] 

SEC.  1530.  Sealers  of  weights  and  measures. — The  sealing  and 
licensing  of  weights  and  measures  shall  be  the  duty  of  the  provincial 
treasurers  and  their  deputies,  and  for  the  purposes  of  this  law  such 
officers  shall  be  termed  sealers  of  weights  and  measures. 

[2657—1685.] 

SEC.  1531.  Destruction  of  defective  instrument  of  weight  or  meas- 
ure.— Any  defective  instrument  of  weight  or  measure  may  be  de- 
stroyed by  any  inspector  or  sealer  of  weights  and  measures  if  its 
defect  is  such  that  it  can  not  readily  and  securely  be  repaired. 

[2657—1686.] 

SEC.  1532.  Testing  of  instruments  used  in  Government  work. — All 
measures  and  instruments  for  determining  weight  used  in  the  Gov- 
ernment work  or  maintained  for  public  use  by  any  province  or- 
municipality  shall  be  tested  and  sealed  free  of  charge. 

[2657—1687.] 


INTERNAL   REVENUE   LAWS.  47 

SEC.  1533.  Dealers  permit  to  keep  unsealed  weights  and  meas- 
ures.— Upon  obtaining  written  permission  from  the  collector  of  in- 
ternal revenue  any  dealer  may  keep  instruments  of  weight  and 
measure  in  stock  for  sale  without  sealing,  until  sold  or  used. 

[2657—1688.] 

ARTICLE  X. — AD  VALOREM  TAX  ON  OUTPUT  or  MINES. 

SEC.  1534.  Rate  and  basis  of  tax  on  mines. — There  shall  be  levied 
and  collected  on  the  gross  output  of  each  mine  an  ad  valorem  tax 
equal  to  1-}  per  centum  of  the  actual  market  value  of  such  output. 

[2657—1689.] 

SEC.  1535.  Time  and  manner  of  collection. — The  ad  valorem  taxes 
on  the  value  of  the  output  of  mines  shall  be  assessed  and  paid  before 
the  removal  of  any  such  output  from  the  locality  where  it  is  mined. 
But  the  output  of  mines  may  be  removed  from  such  locality  without 
the  payment  of  such  tax  if  the  owner  or  concessionaire  of  the  mine 
shall  first  file  a  bond,  with  the  Bureau  of  Internal  Be  venue  in  the 
form  and  amount  and  with  such  sureties  as  the  collector  of  internal 
revenue  may  require,  conditioned  upon  the  future  payment  of  said 
tax  at  such  time  and  place  as  the  collector  may  direct.  For  the  pur- 
pose of  establishing  a  uniform  basis  for  the  assessment  of  this  tax 
the  collector  of  internal  revenue  shall,  from  time  to  time,  make  an  as- 
sessment of  the  actual  market  value  of  the  various  products  of  the 
mines  in  the  Philippine  Islands  subject  to  the  tax  herein  imposed. 

[2657—1690.] 

ARTICLE  XI. — TAX  ON  INHERITANCES,  LEGACIES  AND  OTHER 
ACQUISITIONS  MORTIS  CAUSA. 

SEC.  1536.  (As  amended  by  sec.  10,  act  No.  2835.)  Conditions  and  rate 
of  taxation. — Every  transmission  of  real  property  located  in  the 
Philippine  Islands  and  real  rights  in  such  property;  of  any  fran- 
chise which  must  be  exercised  in  the  Philippine  Islands;  of  any 
shares,  obligations,  or  bonds  issued  by  any  corporation  or  "  sociedad 
anonima  "  organized  or  constituted  in  the  Philippine  Islands  in  ac- 
cordance with  its  laws ;  of  any  shares  or  rights  in  any  partnership, 
business,  or  industry  established  in  the  Philippine  Islands;  or  of  any 
personal  property  located  in  the  Philippine  Islands,  by  virtue  of  in- 
heritance, devise^  bequest,  gift  mortis  causa,  or  advance  in  anticipa- 
tion of  inheritance,  devise,  or  bequest  shall  be  subject  to  the  follow- 
ing tax: 

(a)  When  the  surviving  spouse,  a  legitimate,  recognized  natural, 
or  adopted  child,  or  legitimate  descendant  of  any  of  them,  is  the 
beneficiary,  1  per  centum  on  the  inventoried  property  if  not  exceed- 
ing 50,000  pesos ;  LJ  per  centum  upon  the  inventoried  property  if  it 


48  INTERNAL   REVENUE   LAWS. 

is  in  excess  of  50,000  pesos  and  not  in  excess  of  250,000  pesos;  2£ 
per  centum  upon  the  inventoried  property  if  it  is  in  excess  of  250,000 
pesos,  and  not  in  excess  of  500,000  pesos,  4  per  centum  upon  all  in- 
ventoried property  in  an  amount  in  excess  of  500,000  pesos. 

(b)  When  either  of  the  legitimate  parents  of  the  deceased,  or  a 
legitimate  brother  or  sister  of  the  same,  or  the  father  or  mother  who 
had  recognized  him  as  a  natural  child,  is  the  beneficiary,  there  shall 
be  collected  the  same  tax  fixed  in  the  paragraph  next  preceding,  with 
an  increase  of  100  per  centum. 

(c)  When  other  relatives  not  included  in  the  two  next  preceding 
subsections  are  beneficiaries  there  shall  be  collected  the  tax  fixed  in 
subsection  (a)  with  an  increase  of  200  per  centum. 

(d)  When  strangers  are  beneficiaries  there  shall  be  collected  the  tax 
fixed  in  subsection  (a)  .with  an  increase  of  300  per  centum,  strangers 
being  deemed,  for  the  purposes  of  this  tax,  those  who  are  beyond  the 
sixth  degree  of  relationship  by  consanguinity  in  the  collateral  line 
and  the  relatives  by  affinity,  with  the  exception  of  the  spouse. 

In  case  the  property  is  transmitted  to  the  heirs  subject  to  the  usu- 
fructuary interest,  use,  or  habitation  or  annuity  of  a  third  person, 
the  tax  shall  be  based  on  the  inventoried  property  less  the  value  of 
the  usufruct,  use,  or  habitation  or  annuity  determined  as  hereinafter 
provided. 

[2601—1.] 

SEC.  1537.  Property  subject  to  tax. — (Repealed  by  sec.  11,  act  No. 
2835,  and  the  following  enacted  in  lieu  thereof:) 

SEC.  1537.  Payment  of  tax  antecedent  to  the  transfer  of  shares, 
bonds,  or  rights. — There  shall  not  be  transferred  to  any  new  owner 
in  the  books  of  any  corporation,  "  sociedad  anonima,"  partnership, 
business,  or  industry  organized  or  established  in  the  Philippine 
Islands,  any  shares,  obligations,  bonds,  or  rights  by  way  of  gift 
mortis  causa,  legacy,  or  inheritance  unless  it  is  shown  that  the  tax 
fixed  in  this  article  and  due  thereon  has  been  paid. 

[2601—2.] 

SEC.  1538.  Exemption  in  favor  of  surviving  spouse  and  children. — 
The  portions  of  the  surviving  spouse,  a  legitimate  child,  and  a  rec- 
ognized natural  or  adopted  child,  shall  be  wholly  exempt  from  tax 
in  so  far  as  not  in  excess  of  3,000  pesos  each. 

[2601—3.] 

SEC.  1539.  Deductions  to  be  made  in  determining  net  taxable 
amount. — In  order  to  determine  the  net  sum  which  must  bear  the 
tax,  when  an  inheritance  is  concerned,  there  shall  be  deducted  the 
expenses  of  the  funeral  and  burial  of  the  deceased,  the  proper  capi- 
tal of  the  surviving  spouse,  and  his  orrher  part  of  the  gains  (ganan- 


INTERNAL   REVENUE   LAWS.  49 

•ciales),  the  proven  debts,  exempt  portions,  the  judicial  expenses  of 
the  testamentary  or  intestate  proceedings,  and  claims  against  in- 
solvent persons. 

[2601—4.] 

SEC.  1540.  Additions  of  gifts  and  advances. — After  the  aforemen- 
tioned deductions  have  been  made  there  shall  be  added  to  the  result- 
ing amount  the  value  of  all  gifts  or  advances  made  by  the  prede- 
cessor to  any  of  those  who,  after  his  death,  shall  prove  to  be  his 
heirs,  devisees,  legatees,  or  donees  mortis  causa. 

[2601—4.] 

SEC.  1541.  Rule  of  taxation  when  beneficiaries  belong  to  different 
classes. — When  divers  persons  not  included  in  the  same  class  or 
group  of  section  1536  hereof  are  beneficiaries,  each  share  shall  be 
subject  to  the  scale  of  taxation  which  corresponds  to  the  person 
taking. 

[2601—5.] 

SEC.  1542.  (As  amended  by  sec.  12,  act  No.  2835.)  Determination  of 
value  of  usufructs,  annuities,  and  real  property. — In  order  to  de- 
termine the  value  of  the  right  of  usufruct,  use,  or  habitation,  as  well 
as  that  of  annuity,  there  shall  be  taken  into  account  the  probable  life 
of  the  beneficiary  in  accordance  with  the  American  Tropical  Experi- 
ence Table,  calculated  at  8  per  centum  annual  interest.  For  the 
purpose  of  determining  the  value  of  real  property,  the  assessed  value 
as  shown  by  the  tax  rolls  shall  be  taken  as  the  minimum. 

[2601—6.] 

SEC.  1543.  Exemption  of  certain  acquisitions  and  transmissions. — 
The  following  shall  not  be  taxed : 

(a)  The  merger  of  the  usufruct  in  the  owner  of  the  naked  title. 

(b)  The  transmission  or  delivery  of  the  inheritance  or  legacy  by 
the  fiduciary  heir  or  legatee  to  the  trustees. 

(c)  The  transmission  from  the  first  heir,  legatee,  or  donee  in 
favor  of  another  beneficiary,  in  accordance  with  the  desire  of  the 
predecessor. 

In  the  last  two  cases,  if  the  scale  of  taxation  appropriate  to  the 
new  beneficiary  is  greater  than  that  paid  by  the  first,  the  former 
must  pay  the  difference. 

[2601—7.] 

SEC.  1544.  (As  amended  by  sec.  13,  act  No.  2835.)  When  tax  to  ~be 
jHud. — The  tax  fixed  in  this  article  shall  be  paid : 

(a)  In  the  cases  (Z>)  and  (c)  of  the  next  preceding  section,  before 
entrance  into  possession  of  the  property. 

(b)  In  other  cases,  within  the  six  months  subsequent  to  the  death 
of  the  predecessor ;  but  if  judicial  testamentary  or  intestate  proceed- 

52853—21 4 


50  INTERNAL   REVENUE   LAWS. 

ings  shall  be  instituted  prior  to  the  expiration  of  said  period,  the 
payment  shall  be  made  by  the  executor  or  administrator  before  de- 
livering each  beneficiary  his  share. 

If  the  tax  is  not  paid  within  the  period  provided  for  in  the  next 
preceding  paragraph,  interest  at  the  rate  of  12  per  centum  per  annum 
shall  be  added  as  part  of  the  tax. 

A  certified  copy  of  all  letters  testamentary  or  of  administration 
shall  be  furnished  the  collector  of  internal  revenue  by  the  clerk  of 
court  within  30  days  after  their  issuance. 

[2601—8.] 

SEC.  1545.  Beneficiary  to  ~be  charged  with  tax  on  his  corresponding 
portion. — In  the  absence  of  contrary  disposition  by  the  predecessor, 
there  shall  be  charged  to  the  account  of  each  beneficiary  the  part 
of  the  tax  which  pertains  to  him,  in  proportion  to  the  value  of  the 
benefit  received,  and  in  accordance  with  the  scale  fixed  for  the  class 
or  group  to  which  he  pertains. 

[2601—10.] 

SEC.  1546.  Payment  be/ore  delivery  by  executor  or  adininixtra- 
tor. — No  judge  shall  authorize  the  executor  or  judicial  administrator 
to  deliver  a  distributive  share  to  any  party  interested  in  the  estate 
unless  it  shall  appear  this  tax  has  been  paid. 

[2601— 11,] 

SEC.  1547.  Payment  of  ta.r  antecedent  to  registration  of  dot-it - 
rnents. — There  shall  not  be  registered  in  the  registiy  of  property 
any  document  transferring  real  property  or  real  rights  therein  or 
any  chattel  mortgage,  by  way  of  gift  mortis  causa,  legacy,  or  in- 
heritance, unless  the  payment  of  the  tax  fixed  in  this  article  and 
actually  due  thereon  shall  be  shown. 

[2601—13.] 

SEC.  1548.  Restitution  of  taw  upon  satisfa-ction  of  outstanding 
obligation. — If.  after  the  payment  of  the  tax,  new  obligations  of  the 
testator  shall  appear,  and  the  persons  interested  shall  have  satisfied 
them  by  order  of  the  court,  they  shall  have  a  right  to  the  restitution 
of  the  proportional  parts  of  the  tax  paid. 

[2,601—15.] 

ARTICLE   XII. — ADMINISTRATIVE   PROVISIONS   RELATIVE   TO   PERSONS 
AND  ESTABLISHMENTS  SUBJECT  TO  PRIVILEGE  TAXES. 

SEC.  1549.  Registration  of  name  or  style  with  provincial  treas- 
urer.— Every  person  engaged  in  any  business  or  occupation  on  which 
a  privilege  tax  is  imposed  by  law  shall  register  with  the  provincial 
treasurer  his  name  or  style,  place  of  residence,  business  or  occupation, 
and  the  place  where  such  business  or  occupation  is  carried  on.  In 
case  of  a  firm  the  names  and  residences  of  the  various  persons  con- 
stituting the  same  shall  also  be  registered. 

[2657—1691.] 


SEC.  155C 


INTERNAL   REVENUE   LAWS.  51 


5EC.  1550.  Sign  to  be  exhibited  by  distiller  or  rectifier. — Every  per- 
son engaged  in  distilling  or  rectifying  spirits,  and  every  wholesale 
liquor  dealer,  shall  keep  conspicuously  on  the  outside  of  his  place  of 
business  a  sign  exhibiting,  in  letters  not  less  than  6  centimeters  high, 
his  name  or  firm  style,  with  the  words  "  Registered  distiller,"  "  Rec- 
tifier  of  spirits,"  or  "  Wholesale  liquor  dealer,"  as  the  case  may  be, 
and  his  assessment  number. 

[2657—1692.] 

SEC.  1551.  Sign  to  be  exhibited  by  manufacturer  of  products  of 
tobacco. — Every  manufacturer  of  cigars,  cigarettes,  or  tobacco,  and 
every  wholesale  dealer  in  leaf  tobacco  or  manufactured  products  of 
tobacco  shall  place  and  keep  on  the  outside  of  the  building  wherein 
his  business  is  carried  on,  so  that  it  can  be  distinctly  seen,  a  sign  stat- 
ing his  full  name  and  business  in  letters  not  less  than  6  centimeters 
high  and  also  giving  his  assessment  number  in  figure's. 

[2657—1693.] 

SEC.  1552.  Exhibition  of  certificate  of  payment  at  place  of  busi- 
ness.— The  certificate  or  receipt  showing  payment  of  tax  issued  to  a 
person  engaged  in  a  business  or  occupation  subject  to  a  privilege  tax 
shall  be  kept  conspicuously  exhibited  in  plain  view  in  or  at  the  place 
where  the  business  is  conducted  or  occupation  plied;  and  in  case  of 
a  peddler  or  other  person  not  having  a  fixed  place  of  business  shall 
be  kept  in  the  possession  of  the  holder  thereof,  subject  to  production 
upon  the  demand  of  any  internal-revenue  officer. 

[2657—1694.] 

ARTICLE  XIII. — ADMINISTRATIVE  PROVISIONS  REGULATING  BUSINESS 
OF  PERSONS  DEALING  IN  ARTICLES  SUBJECT  TO  SPECIFIC  TAX. 

SEC.  1553.  Extent  of  supervision  over  establishments  producing 
taxable  output. — The  Bureau  of  Internal  Revenue  has  authority  to 
supervise  establishments  where  articles  subject  to  a  specific  tax  are 
made,  and  to  prescribe  regulations  as  to  the  mode  in  which  the  proc- 
esses of  production  shall  be  conducted  in  so  far  as  may  be  necessary 
to  secure  a  sanitary  output  and  to  safeguard  the  revenue. 

[2657—1695.] 

SEC.  1554.  Records  to  be.  kept  by  manufacturers — Assessments 
based  thereon. — The  collector  of  internal  revenue  is  authorized  to 
prescribe,  by  regulation,  the  records  which  shall  be  kept  by  manu- 
facturers of  articles  subject  to  specific  tax.  and  such  records,  whether 
of  raw  materials  received  into  the  factory  or  of  articles  produced 
therein,  shall  be  deemed  public  and  official  documents  for  all  pur- 
poses. 

The  records  of  raw  materials  kept  by  such  manufacturers  may  be 
used  as  a  species  of  evidence  by  which  to  determine  the  amount  of 


52  INTERNAL   F.E VENUE   LAWS. 

specific  taxes  due  from  them,  and  whenever  the  amount  of  raw 
materials  received  into  any  factory  exceeds  the  amount  of  manu- 
factured or  partially  manufactured  products  on  hand  and  lawfully 
removed  from  the  factory,  plus  waste  removed  or  destroyed,  and  a 
reasonable  allowance  for  unavoidable  loss  in  manufacture,  the  col- 
lector of  internal  revenue  may  assess  and  collect  the  tax  due  on  the 
products  which  should  have  been  produced  from  the  excess. 

[2657—1696.] 

SEC.  1555.  Premises  subject  to  approval  ~by  collector. — No  person 
shall  engage  in  business  as  a  manufacturer  of  articles  subject  to  a 
specific  tax  unless  the  premises  upon  which  the  business  is  to  be 
conducted  shall  have  been  approved  by  the  collector  of  internal 
revenue. 

[2657—1697.] 

SEC.  1556.  Labels  and  form  of  packages  prescribed  by  collector. — 
All  articles  of  domestic  manufacture  subject  to  a  specific  tax  and  all 
leaf  tobacco  shall  be  put  up  and  prepared  by  the  manufacturer  or 
producer,  when  removed  for  sale  or  consumption,  in  such  packages 
only  and  bearing  such  marks  or  brands  as  shall  be  prescribed  in  the 
bureau  regulations;  and  goods  of  similar  character  imported  into 
the  islands  shall  likewise  be  packed  and  marked  in  such  manner  as 
may  be  required. 

[2657—1698.] 

SEC.  1557.  Removal  of  articles  after  payment  of  tax. — When  the 
tax  has  been  paid  on  articles  or  products  subject  to  a  specific  tax 
the  same  shall  not  thereafter  be  stored  or  permitted  to  remain  in  the 
distillery,  distillery  warehouse,  bonded  warehouse,  or  other  factory 
or  place  where  produced. 

[2657—1699.] 

SEC.  1558.  Storage  of  goods  in  internal-revenue  bonded  ware- 
house.— An  internal-revenue  bonded  warehouse  may  be  maintained 
in  the  city  of  Manila  for  the  storing  of  imported  or  manufactured 
goods  which  are  subject  to  a  specific  tax.  The  taxes  on  such  goods 
shall  be  payable  only  upon  removal  from  such  warehouse,  and  a 
reasonable  charge  shall  be  made  for  their  storage  therein.  The 
collector  of  internal  revenue  may,  in  his  discretion,  exact  a  bond  to 
secure  the  payment  of  the  tax  on  any  goods  so  stored. 

[2657—1700.] 

SEC.  1559.  Proof  of  exportation — Exporters  bond. — Exporters 
of  goods  that  would  be  subject  to  a  specific  tax  if  sold  or  removed 
for  consumption  in  the  Philippine  Islands  shall  submit  proof  of 
exportation  satisfactory  to  the  collector  of  internal  revenue,  and 
when  the  same  is  deemed  necessary,  shall  be  required  to  give  a  bond 


INTERNAL   REVENUE   LAWS.  53 

prior  to  the  removal  of  the  goods  for  shipment,  conditioned  for  the 
exportation  of  the  same  in  good  faith. 

[2657—1701.] 

SEC.  1560.  Manufacturers^  and  importers'*  bonds. — Manufacturers 
and  importers  of  articles  subject  to  a  specific  tax  shall  give  bond-in  - 
an  amount  equal,  as  nearly  as  can  be  estimated,  to  20  per  centum 
of  the  taxes  payable  by  them  during  an  average  year.  Such  bond 
shall  be  conditioned  for  the  faithful  compliance,  during  the  time 
such  business  is  followed,  with  the  law  and  regulations  relating  to 
such  business  and  for  the  payment  of  all  taxes  lawfully  accruing  in 
respect  to  the  goods  manufactured  or  imported,  as  well  as  for  the 
satisfaction  of  all  fines  and  penalties  imposed  by  the  internal  revenue 
law.  No  such  bond  shall  be  required  in  an  amount  exceeding  25,000 
pesos  nor  be  received  in  a  sum  less  than  200  pesos. 

[2657—1702.] 

SEC.  1561.  Records  to  ~be  kept  ~by  wholesale  dealers. — Wholesale 
dealers  shall  keep  records  of  their  purchases  and  sales  or  deliveries 
of  articles  subject  to  a  specific  tax,  in  such  form  as  shall  be  pre- 
scribed in  the  bureau  regulations.  These  records  and  the  entire 
stock  of  goods  subject  to  tax  shall  be  open  at  all  times  to  the  inspec- 
tion of  internal-revenue  officers. 

[2657—1708.] 

SEC.  1562.  Records  to  be  kept  ~by  dealers  in  leaf  tobacco. — Dealers 
in  leaf  tobacco  shall  keep  records  of  the  product  sold  or  delivered 
by  them  to  other  persons  in  such  manner  as  may  be  prescribed  in 
the  regulations  of  the  Bureau  of  Internal  Revenue,  such  records  to 
be  at  all  times  open  to  the  inspection  of  internal-revenue  officers. 

[2657—1704.] 

SEC.  1563.  Preservation  of  invoices  and  stamps. — All  dealers  who- 
soever shall  preserve  all  official  invoices  received  by  them  from  man- 
ufacturers, together  with  the  fractional  parts  of  stamps  affixed 
thereto,  and  upon  demand  shall  deliver  or  transmit  the  same  to  any 
internal-revenue  officer. 

[2657—1705.] 

SEC.  1564.  Information  to  be  given  by  manufacturers  of  distilling 
apparatus. — Manufacturers  of  stills,  boilers,  or  other  vessels  to  be 
used  for  distilling  shall,  before  any  such  apparatus  or  utensil  is  re- 
moved from  the  place  of  manufacture,  give  written  information  to 
the  collector  of  internal  revenue  as  to  the  nature  and  capacity  of 
the  same,  the  time  when  it  is  to  be  removed,  and  the  place  for  which 
it  is  destined,  as  well  as  the  name  of  the  person  by  whom  it  is  to  be 
used;  and  such  still,  boiler,  or  vessel  shall  not  be  set  up  without  a 
permit  in  writing  from  the  collector  of  internal' revenue. 

[2657—1706.] 


54  INTERNAL   REVENUE   LAWS. 

SEC.  1565.  Establishment  of  distillery  warehouses. — Every  dis- 
tiller, when  so  required  by  the  collector  of  internal  revenue,  shall 
provide  at  his  own  expense  a  warehouse,  to  be  situated  on  and  to 
constitute  a  part  of  his  distillery  premises  and  to  be  used  only  for 
the  storage  of  distilled  spirits  of  his  own  manufacture  until  the  tax 
thereon  shall  have  been  paid ;  but  no  dwelling  house  shall  be  used  for 
such  purpose.  Such  warehouse,  when  approved  by  the  collector  of 
internal  revenue,  is  hereby  declared  to  be  a  bonded  warehouse,  to  be 
known  as  a  distillery  warehouse. 

[2657—1707.] 

SEC.  1566.  Custody  of  distillery  warehouse, — Every  distillery  ware- 
house shall  be  in  the  joint  custody  of  the  storekeeper,  if  one  is  as- 
signed thereto,  and  of  the  proprietor  thereof.  It  shall  be  kept  se- 
curely locked,  and  shall  at  no  time  be  unlocked  or  opened  or  remain 
unlocked  or  open  unless  in  the  presence  of  such  storekeeper  or  other 
person  who  may  be  designated  to  act  for  him  as  provided  by  law. 

L2657— 1708.] 

SEC.  1567.  Limitation  on  quantity  of  spirits  removed,  from,  ware- 
house.— No  distilled  spirits  shall  be  removed  from  any  distillery, 
distillery  warehouse,  or  bonded  warehouse  in  quantities  of  less  than 
15  gauge  liters  at  any  one  time,  except  bottled  goods,  which  may  be 
removed  by  the  case  of  not  less  than  12  bottles. 

[2657—1709.] 

SEC.  1568.  Requirements  incident  to  process  of  denaturing  al- 
cohol.— Where  alcohol  is  withdrawn  for  denaturing  for  use  in  the 
arts  and  industries,  the  process  of  denaturing  shall  be  effected  either 
on  the  distillery  premises  or  in  a  bonded  warehouse  designated  by  the 
collector  of  internal  revenue  for  denaturing  purposes  only.  To  such 
warehouses  alcohol  may  be  transferred  under  bond  and  under  con- 
ditions prescribed  in  the  bureau  regulations. 

[2657—1710.] 

SEC.  1569.  Recovery  of  alcohol  for  use  in  arts  and  industries. — 
Manufacturers  employing  processes  in  which  denatured  alcohol  used 
in  arts  and  industries  is  expressed  or  evaporated  from  the  articles 
manufactured  may,  under  regulations  to  be  prescribed  by  the  bureau, 
be  permitted  to  recover  the  alcohol  so  used  and  restore  it  again  to  a 
condition  suitable  solely  for  use  in  manufacturing  processes. 

[2657—1711.] 

SEC.  1570.  Supervision  over  rectification  and  compounding  of 
liquors. — Persons  engaged  in  the  rectification  or  compounding  of 
liquors  shall,  as  to -the  mode  of  conducting  their  business  and  super- 
vision over  the  same,  be  subject  to  all  the  requirements  of  law  ap- 
plicable to  distilleries,  but  if  they  make  use  of  spirits  upon  which 


INTERNAL   REVENUE   LAWS.  OO 

the  specific  tax  has  been  paid  no  further  tax  shall  be  collected  on 
any  liquors  produced  exclusively  therefrom. 

[2657—1712.] 

SEC.  1571.  Authority  of  officer  in  searching  for  taxable  articles. — 
Any  officer  or  agent  of  internal  revenue  may  in  the  discharge  of  his 
official  duties  enter  any  house,  building,  or  place  where  articles  sub- 
ject to  an  internal-revenue  tax  are  produced  or  kept,  or  are  believed 
by  him  upon  reasonable  grounds  to  be  produced  or  kept,  so  far  as 
may  be  necessary  to  examine  or  discover  the  same. 

[2657—1713.] 

SEC.  15T2.  Detention  of  package  containing  taxable  articles. — Any 
revenue  officer  may  detain  any  package  containing  or  supposed  to 
contain  articles  subject  to  a  specific  tax  when  he  has  good  reason  to 
believe  that  the  lawful  tax  has  not  been  paid  or  that  the  package 
has  been  or  is  being  removed  in  violation  of  law,  and  every  such 
package  shall  be  held  by  such  officer  in  a  safe  place  until  it  shall  be 
determined  whether  the  property  so  detained  is  liable  by  law  to  be 
proceeded  against  for  forfeiture;  but  such  summary  detention  shall 
not  continue  in  any  case  longer  than  seven  days  without  process  of 
law  or  intervention  of  the  officer  to  whom  such  detention  is  to  be 
reported. 

[2657—1714.] 

SEC.  1573.  Inscription  to  ~be  placed  on  skimmed  milk. — All  con- 
densed skimmed  milk  and  all  milk,  in  whatever  form,  from  which 
the  fatty  part  has  been  removed  totally  or  in  part,  sold  or  put  on 
sale  in  the  Philippine  Islands,  shall  be  clearly  and  legibly  marked 
on  its  immediate  containers,  and  in  all  the  languages  in  which  such 
containers  are  marked,  with  the  words,  "  This  milk  is  not  suitable  for 
nourishment  for  infants  less  than  1  year  of  age,"  or  with  other 
equivalent  words. 

[2657—1715.] 

ARTICLE    XIV. — ADMINISTRATIVE     PROVISIONS    RELATIVE     TO    PRO- 
HIBITED DRUGS. 

SEC.  1574.  Words  and  phrases  defined. — "Prohibited  drug,"  as 
herein  used,  includes  opium,  cocaine,  alpha  and  beta  eucaine,  their 
derivatives,  and  all  preparations  made  from  them. 

"  Opium "  embraces  every  kind,  class,  and  character  of  opium, 
whether  crude,  prepared,  ash,  or  refuse,  and  all  narcotic  prepara- 
tions theregf  or  therefrom,  and  all  morphine  or  alkaloids  of  opium 
and  all  preparations  in  which  opium,  morphine,  or  any  alkaloid  of 
opium  enters  as  an  ingredient,  together  with  all  opium  leaves  and 
Nvnippings  of  opium  leaves,  whether  such  leaves  or  wrappings  are 
prepared  for  use  or  not. 

[2657—1716.] 


56  INTERNAL   REVENUE   LAWS. 

SEC.  1575.  Lawful  possession  and  uses  of  prohibited  dr-ugs  speci- 
fied.— Prohibited  drugs  may  be  lawfully  kept,  used,  administered, 
and  dealt  in  under  the  following  conditions  and  by  the  following 
persons  only : 

(a)  Duly  licensed  and  practicing  physicians,  dentists,  and  veteri- 
narians may,  in  the  proper  course  of  their  professional  practice  onlyr 
prescribe  and  administer,  or  cause  to  be  administered,  prohibited 
drugs  as  medicine  or  anesthetic,  and  may  receive  and  keep  the  same 
in  their  possession  for  such  use. 

(b)  Government  bureaus  or  officers  of  the  Government  duly  des- 
ignated in  writing  for  such  purpose  by  the  governor  general  may 
receive,  keep,  use,  and  dispose  of  such  drugs  in  accordance  with  law. 
and  the  same  may  be  lawfully  sold,  transferred,  or  delivered  to 
them. 

(c)  Pharmacists  and  second-class  pharmacists  may  receive,  keep, 
and   dispense   prohibited   drugs   upon   the   prescription   of   a    duly 
licensed   and   practicing  physician,   dentist,   or   venterinarian,   and 
upon  permit  from  the  collector  of  internal  revenue  may  transfer  and 
deliver  the  same  to  other  pharmacists  and  second-class  pharmacists 
or  to  any  person  or  institution  lawfully  authorized  to  receive  the 
same. 

[2657 — 1717.]      (Reference:  See  act  No.  2762,  sec  2  (e).) 

SEC.  1576.  Importation  of  opium — Storage  of  same. — Opium  shall 
be  imported  only  by  the  Philippine  Government  through  the  Bureau 
of  Internal  Revenue ;  and  all  imported  opium,  after  the  payment  of 
duties,  taxes,  and  charges,  shall  be  delivered  by  the  customs  au- 
thorities to  the  collector  of  internal  revenue  for  storage  in  a  place 
to  be  approved  by  him.  Except  in  case  of  fire  or  similar  necessity, 
opium  so  stored  shall  be  removed  only  for  delivery  to  a  person  au- 
thorized to  receive  the  same,  and  before  removal  from  storage  the 
drug  shall  be  marked  or  labeled  in  such  manner  as  may  be  prescribed 
in  the  regulations  of  the  bureau. 

A  reasonable  charge  may  be  made  for  such  storage,  to  be  paid 
before  the  opium  is  removed. 

[2657—1718.] 

SEC.  1577.  Record  to  be  kept  l>y  pharmacists — Inspection  of 
same. — Physicians,  dentists,  veterinarians,  pharmacists,  and  second- 
class  pharmacists  shall  keep  true  and  correct  records  of  all  pro- 
hibited drugs  received  and  dispensed  or  transferred  by  them,  in 
such  form  and  manner  as  may  be  prescribed  in  the  regulations  of 
the  Bureau  of  Internal  Revenue. 

Such  record  and  the  stock  of  prohibited  drugs  on  hand  shall  be 
subject  to  inspection  at  all  times  by  the  duly  authorized  officers  and 
agents  of  the  Bureau  of  Internal  Revenue. 

[2657—1719.] 


INTERNAL   REVENUE   LAWS.  57 

ARTICLE  XV. — REMEDIES  IN  GENERAL. 

SEC.  1578.  Injunction  not  available  to  restrain  collection  of  tax. — 
No  court  shall  have  authority  to  grant  an  injunction  to  restrain 
the  collection  of  any  internal-revenue  tax. 

[2657—1720.] 

5EC.  1579.  Recovery  of  tax  paid  under  protest. — When  the 
iidity  of  any  tax  is  questioned,  or  its  amount  disputed,  or  other 
ion  raised  as  to  liability  therefor,  the  person  against  whom 
against  whose  property  the  same  is  sought  to  be  enforced  shall 
pay  the  tax  under  instant  protest,  or  upon  protest  within  10  days, 
and  shall  thereupon  request  the  decision  of  the  collector  of  internal 
revenue.  If  the  decision  of  the  collector  of  internal  revenue  is 
adverse,  or  if  no  decision  is  made  by  him  within  six  months  from 
the  date  when  his  decision  was  requested,  the  taxpayer  may  pro- 
ceed, at  any  time  within  two  years  after  the  paj^ment  of  the  tax,  to 
bring  an  action  against  the  collector  of  internal  revenue  for  the  re- 
covery without  interest  of  the  sum  alleged  to  have  been  illegally 
collected,  the  process  to  be  served  upon  him,  upon  the  provincial 
treasurer,  or  upon  the  officer  collecting  the  tax. 

[2657—1721.] 

SEC.  1580.  Action  to  contest  forfeiture  of  chattel. — In  case  of  the 
seizure  of  personal  property  under  claim  of  forfeiture  the  owner, 
desiring  to  contest  the  validity  of  the  forfeiture,  may  at  any  time 
before  sale  or  destruction  of  the  property  bring  an  action  against 
the  person  seizing  the  property  or  having  possession  thereof  to  re- 
cover the  same,  and  upon  giving  proper  bond  may  enjoin  the  sale; 
or  after  the  sale  and  within  six  months  he  may  bring  an  action  to 
recover  the  net  proceeds  realized  at  the  sale. 

[2657—1722.] 

SEC.  1581.  Form  and  mode  of  proceeding  in  actions  arising  under 
internal  revenue  law. — Civil  actions  and  proceedings  instituted  in 
behalf  of  the  Government  under  the  authority  of  this  chapter  or 
other  law  enforced  by  the  Bureau  of  Internal  Revenue  shall  be 
brought  in  the  name  of  the  Government  of  the  Philippine  Islands 
and  shall  be  conducted  by  the  provincial  fiscal  or  the  attorney  gen- 
eral, or  by  any  person  designated  by  the  latter;  but  no  civil  action 
for  the  recovery  of  taxes  or  the  enforcement  of  any  fine,  penalty,  or 
forfeiture  under  any  such  law  shall  be  begun  without  the  approval 
of  the  collector  of  internal  revenue. 

[2657—1723.] 

SEC.  1582.  (As  amended  by  sec.  14,  act  No.  2835.)  Authority  of  .col- 
lector to  make  compromises  and  to  refund  taxes. — The  collector 
of  internal  revenue  may  compromise  any  civil  or  other  case  arising 
under  this  chapter  or  other  law  or  part  of  law  administered  by  the 


58  INTERNAL   REVENUE   LAWS. 

Bureau  of  Internal  Revenue,  may  refund  taxes  erroneously  or 
illegally  received,  or  penalties  imposed  without  authority,  and  may 
remit  before  payment  any  tax  that  appears  to  be  unjustly  assessed 
or  excessive. 

He  shall  refund  the  value  of  internal-revenue  stamps  when  the 
same  are  returned  in  good  condition  by  the  purchaser,  and  may, 
in  his  discretion,  redeem  or  exchange  unused  stamps  that  have  been 
rendered  unfit  for  use,  and  may  refund  their  value  upon  proof  of 
destruction. 

[2657—1724.] 

SEC.  1583.  Satisfaction  of  judgment  recovered  against  treasurer 
or  other  officer. — When  an  action  is  brought  against  any  revenue 
officer  to  recover  damages  by  reason  of  any  act  done  in  the  perform- 
ance of  official  duty,  and  the  collector  of  internal  revenue  is  notified 
of  such  action  in  time  to  make  defense  against  the  same,  through 
the  attorney  general,  any  judgment,  damages,  or  costs  recovered  in 
such  action  shall  be  satisfied  by  the  collector  of  internal  revenue 
upon  approval  of  the  department  head ;  or  if  the  same  be  paid  by  the 
person  sued,  shall  be  repaid  or  reimbursed  to  him. 

Xo  such  judgment,  damages,  or  costs  shall  be  paid  or  reimbursed 
in  behalf  of  a  person  who  has  acted  negligently  or  in  bad  faith,  or 
with  willful  oppression. 

[2657—1725.] 

SEC.  1584.  Remedy  for  enforcement  of  statutory  penal  provi- 
sions.— The  remedy  for  enforcement  of  statutory  penalties  of  all 
sorts  shall  be  by  criminal  or  civil  action,  as  the  particular  situation 
may  require. 

[2657— 1726.  J 

SEC.  1585.  Remedy  for  enforcement  of  forfeitures. — The  for- 
feiture of  chattels  and  removable  fixtures  of  any  sort  shall  be  enforced 
by  the  seizure  and  sale,  or  destruction,  of  the  specific  forfeited  prop- 
erty. The  forfeiture  of  real  property  shall  be  enforced  by  a  judg- 
ment of  condemnation  and  sale  in  a  legal  action  or  proceeding,  civil 
or  criminal,  as  the  case  may  require. 

[2657—1727.] 

SEC.  1586.  When  property  to  be  sold  or  destroyed.— Sales  of  for- 
feited chattels  and  removable  fixtures  shall  be  effected,  so  far  as 
practicable,  in  the  same  manner  and  under  the  same  conditions  as 
to  public  notice  and  the  time  and  manner  of  sale  as  are  prescribed 
for  sales  of  personal  property  distrained  for  the  nonpayment  of 
taxes. 

Prohibited  drugs,  opium  apparatus,  liquors,  cigars,  cigarettes,  and 
other  manufactured  products  of  tobacco,  and  all  apparatus  used  in  or 
about  the  illicit  production  of  such  articles  may,  upon  forfeiture,  be 
destroyed  by  order  of  the  collector  of  internal  revenue,  when  the 


INTERNAL   REVENUE   LAWS.  59 

sale  of  the  same  for  consumption  or  use  would  be  injurious  to  the 
public  health  or  prejudicial  to  the  enforcement  of  the  law. 

Forfeited  property  shall  not  be  destroyed  until  at  least  20  days 
after  seizure. 

[2657—1728.] 

SEC.  1587.  Disposition  of  funds  recovered  in  legal  proceedings  or 
obtained  from  forfeitures. — All  judgments  and  moneys  recovered 
and  received  for  taxes,  costs,  forfeitures,  fines,  and  penalties  shall 
be  paid  to  the  collector  of  internal  revenue  or  his  authorized  depu- 
ties as  the  taxes  themselves  are  required  to  be  paid,  and,  except  as 
specially  provided,  shall  be  accounted  for  and  dealt  with  in  the 
same  way. 

[2657—1729.] 

ARTICLE  XVI. — CIVIL  REMEDIES  FOR  COLLECTION  OF  TAXES. 

SEC.  1588.  (As  amended  by  sec.  29,  act  No.  2833.)  Nature  and  extent 
of  tare  lien. — Every  internal-revenue  tax  on  property  or  on  any  busi- 
ness or  occupation,  and  every  tax  on  resources  and  receipts,  and  any 
increment  to  any  of  them  incident  to  delinquency,  shall  constitute 
a  lien  superior  to  all  other  charges  or  liens  not  only  on  the  property 
itself  upon  which  such  tax  may  be  imposed,  but  also  upon  the  prop- 
erty used  in  any  business  or  occupation  upon  which  the  tax  is  im- 
posed and  upon  all  property  rights  therein. 

The  lien  of  the  tax  on  inheritances,  legacies,  and  other  acquisitions 
mortis  causa  shall  have  preference  over  any  real  right  created  thereon 
subsequent  to  the  death  of  the  predecessor,  but  this  preference  will 
be  extinguished  at  the  end  of  five  years  from  the  date  when  the  tax 
becomes  payable  upon  real  property,  and  three  years  upon  any  other 
kind  of  property. 

If  any  person,  corporation,  partnership,  joint-account  (cuenta  en 
participacion),  association,  or  insurance  company  liable  to  pay  the 
income  tax  neglects  or  refuses  to  pay  the  same  after  demand,  the 
amount  shall  be  a  lien  in  favor  of  the  government  of  the  Philippine 
Islands  from  the  time  when  the  assessment  was  made  by  the  col- 
lector of  internal  revenue  until  paid,  with  interest,  penalties,  and 
cost  that  may  accrue  in  addition  thereto  upon  all  property  and  rights 
to  property  belonging  to  the  taxpayer:  Provided,  That  this  lien 
shall  not  be  valid  against  any  mortgagee,  purchaser,  or  judgment 
creditor  until  notice  of  such  lien  shall  be  filed  by  the  collector  in  the 
office  of  the  clerk  of  the  court  of  first  instance  having  jurisdiction 
over  the  property  subject  to  tax. 

[2657—1730.] 

SEC.  1589.  Civil  remedies  for  collection  of  delinquent  taxes. — The 
civil  remedies  for  the  collection  of  internal-revenue  taxes  and  any 


60  INTERNAL   REVENUE   LAWS. 

increment  thereto  resulting  from  delinquency  shall  be  (a)  by  dis- 
traint of  personal  property,  and  upon  exhaustion  thereof  by  levy 
upon  real  property,  and  (b)  by  legal  action.  Either  of  these  reme- 
dies or  both  simultaneously  may  be  pursued  in  the  discretion  of  the 
authorities  charged  with  the  collection  of  such  taxes:  but  the  civil 
remedy  for  the  collection  of  the  cedilla  tax  shall  be  exclusively  by 
distraint. 

Xo  exemption  shall  be  allowed  against  the  internal-revenue  taxes 
in  any  case. 

[2657— ]  731.] 

SEC.  1590.  Distraint  of  personal  property. — The  remedy  by  dis- 
traint shall  proceed  as  follows :  Upon  the  failure  of  the  person  owing 
any  delinquent  tax  or  delinquent  revenue  to  pay  the  same,  at  the 
time  required,  the  collector  of  internal  revenue  or  his  deputy  may 
seize  and  distrain  any  personal  property  belonging  to  such  person 
or  any  property  subject  to  the  tax  lien,  in  sufficient  quantity  to 
satisfy  the  tax,  or  charge,  together  with  any  increment  thereto  in- 
cident to  delinquency,  and  the  expenses  of  the  distraint. 

[2657—1732.] 

SEC.  1591.  Mode  of  preceding  cmtl  dhpoxithi!  of  proceeds. — The 
officer  levying  the  distraint  shall  make  or  cause  to  be  made  an  ac- 
count of  the  goods,  or  effects  distrained,  a  copy  of  which,  signed  by 
himself,  shall  be  left  either  with  the  owner  or  person  from  whose 
possession  such  goods  or  effects  were  taken,  or  at  the  dwelling  or 
place  of  business  of  such  person  and  with  some  one  of  suitable  age 
and  discretion,  to  which  list  shall  be  added  a  statement  of  the  sum 
demanded  and  note  of  the  time  and  place  of  sale ;  and  the  said  officer 
shall  forthwith  cause  a  notification  to  be  exhibited  in  not  less  than 
two  public  places  in  the  municipality  where  the  distraint  is  made, 
specifying  the  time  and  place  of  sale  and  the  articles  distrained. 
The  time  of  sale  shall  not  be  less  than  20  days  after  notice  to  the 
owner  or  possessor  of  the  property  as  above  specified  and  the  publi- 
cation or  posting  of  such  notice.  One  place  for  the  posting  of  such 
notice  shall  be  at  the  office  of  the  president  of  the  municipality  in 
which  the  property  is  distrained.  At  the  time  and  place  fixed  in 
such  notice  the  said  officer  shall  sell  the  goods,  chattels,  credits  or 
effects,  so  distrained,  at  public  auction,  to  the  highest  bidder  for  cash. 

Any  residue  over  and  above  what  is  required  to  pay  the  entire 
claim,  including  expenses,  shall  be  returned  to  the  owner  of  the 
property  sold.  The  expenses  chargeable  upon  such  seizure  and  sale 
shall  embrace  only  the  actual  expense  of  seizure  and  preservation 
of  the  property  pending  the  sale,  and  no  charge  shall  be  imposed  for 
the  services  of  the  local  internal-revenue  officer  or  his  deputy. 

[2657—1733.] 


INTERNAL   REVENUE   LAWS.  61 

SEC.  1592.  Release  of  distrained  property  upon  payment  prior  to 
sale. — If  at  any  time  prior  ta  the  consummation  of  the  sale  all  proper 
charges  are  paid  to  the  officer  conducting  the  sale,  the  goods  or  effects 
distrained  shall  be  restored  to  the  owner. 

[2657—1734.] 

SEC.  1593.  Report  of  sale  to  Bureau  of  Internal  Revenue. — Within 
two  days  after  the  sale  the  officer  making  the  same  shall  make  a 
report  of  his  proceedings  in  writing  to  the  collector  of  internal 
revenue  and  shall  himself  preserve  a  copy  of  such  report  as  an 
official  record. 

[2657— 1735k] 

SEC.  1594.  Purchase  ~by  Government  at  sale  upon  distraint. — When 
property  advertised  for  sale  under  distraint  is  of  a  kind  subject  to 
the  tax  and  the  tax  has  not  been  paid,  and  the  amount  bid  for  such 
property  is  not  equal  to  the  amount  of  the  tax  or  is  very  much  less 
than  the  actual  market  value  of  the  articles  offered  for  sale,  the  pro- 
vincial treasurer  may  purchase  the  same  in  behalf  of  the  Insular 
Government  for  the  amount  of  taxes,  penalties,  and  costs  due  thereon. 

Property  so  purchased  may  be  resold  by  the  provincial  treasurer, 
subject  to  the  regulations  of  the  Bureau  of  Internal  Revenue,  the  net 
proceeds  being  paid  into  the  insular  treasury  and  accounted  for  as 
internal  revenue. 

[2657—1736.] 

SEC.  1595.  Levy  on  real  estate  after  exhaustion  of  personalty. — 
When  personal  effects  sufficient  to  satisfy  the  entire  claim  are  not 
found,  recourse  may  be  had  to  a  levy  upon  any  real  property  belong- 
ing to  the  delinquent. 

To  this  end  the  provincial  treasurer  of  the  province  wherein  the 
tax  accrued  shall  prepare  a  duly  authenticated  certificate  showing 
the  name  of  the  taxpayer  and  the  amounts  of  the  tax  and  penalty  due 
from  him.  Said  certificate  shall  operate  with  the  force  of  a  legal 
execution  throughout  the  province  and,  if  indorsed  by  the  collector 
of  internal  revenue,  shall  have  such  force  throughout  the  Philip- 
pine Islands.  Levy  shall  be  effected  by  writing  upon  said  certificate 
a  description  of  the  property  upon  which  levy  is  made.  At  the 
same  time  written  notice  of  the  levy  shall  be  mailed  to  or  served 
upon  the  delinquent  or,  if  he  be  absent  from  the  islands,  to  his 
agent  or  the  manager  of  the  business  in  respect  to  which  the  liability 
arose,  or  if  there  be  none  such  to  the  occupant  of  the  property  in 
question. 

[2657—1737.] 

SEC.  1596.  Advertisement  and  sale. — Within  20  days  after  levy 
the  officer  conducting  the  proceedings  shall  proceed  to  advertise  the 
property  or  so  much  thereof  as  may  be  necessary  to  satisfy  the  claim 


62  INTERNAL   REVENUE   LAWS. 

and  costs  of  sale;  and  such  advertisement  shall  cover  a  period  of 
at  least  30  days.  It  shall  be  effectuated  by  posting  a  notice  at  the 
main  entrance  of  the  municipal  building  and  in  a  public  and  con- 
spicuous place  in  the  barrio  in  which  the  real  estate  lies,  and  by 
publication  once  a  week  for  three  weeks  in  a  newspaper  of  general 
circulation  published  in  the  municipality  or  city  where  the  property 
is  located,  if  there  be  such  paper. 

The  advertisement  shall  contain  a  statement  of  the  amount  of  taxes 
and  penalties  so  due  and  the  time  and  place  of  sale,  the  name  of  the 
taxpayer  against  whom  the  taxes  are  levied,  and  a  short  description 
of  the  property  to  be  sold.  At  any  time  before  the  day  fixed  for  the 
sale  the  taxpayer  may  discontinue  all  proceedings  by  paying  the 
taxes,  penalties,  and  interest.  If  he  does  not  do  so,  the  sale  shall 
proceed  and  shall  be  held  either  at  the  main  entrance  of  the  municipal 
building  or  on  the  premises  to  be  sold,  as  the  officer  conducting  the 
proceedings  shall  determine  and  as  the  notice  of  sale  shall  specify. 

Within  five  days  after  the  sale  a  return  of  the  proceedings  shall  be 
entered  upon  the  records  of  the  provincial  treasurer;  and  the  provin- 
cial treasurer  shall  then  make  out  and  deliver  to  the  purchaser  a  cer- 
tificate from  his  records,  showing  the  proceedings  of  the  sale,  describ- 
ing the  property  sold,  stating  the  name  of  the  purchaser,  and  setting 
out  the  exact  amount  of  all  public  taxes,  penalties,  and  interest. 

[2657—1738.] 

SEC.  1597.  Redemption  1)y  delinquent. — Within  one  year  from  the 
date  of  sale  the  delinquent  taxpayer,  or  anyone  for  him,  shall  have 
the  right  of  paying  to  the  provincial  treasurer  the  amount  of  the  pub- 
lic taxes,  penalties,  and  interest  thereon  from  the  date  of  delinquency 
to  the  date  of  sale,  together  with  interest  on  said  purchase  price  at 
the  rate  of  15  per  centum  per  annum  from  the  date  of  purchase  to  the 
date  of  redemption;  and  such  payment  shall  entitle  the  person  pay- 
ing to  the  delivery  of  the  certificate  issued  to  the  purchaser  and  a 
certificate  from  the  said  treasurer  that  he  has  thus  redeemed  the 
property,  and  the  treasurer  shall  forthwith  pay  over  to  the  purchaser 
the  amount  by  which  such  property  has  thus  been  redeemed,  and  said 
property  thereafter  shall  be  free  from  the  lien  of  such  taxes  and  pen- 
alties. 

[2657—1739.] 

SEC.  1598.  Final  deed  to  purchaser. — In  case  the  taxpayer  shall  not 
redeem  the  property  as  above  provided,  the  provincial  treasurer 
shall,  as  grantor,  execute  a  deed  conveying  to  the  purchaser  so  much 
of  the  property  against  which  the  taxes  have  been  assessed  as  has  been 
sold,  free  from  all  liens  of  any  kind  whatsoever,  and  the  deeds  shall 
succinctly  recite  all  the  proceedings  upon  which  the  validity  of  the 
sale  depends. 

[2657—1740.] 


SEC.  159: 


INTERNAL   REVENUE   LAWS.  63 


5EC.  1599.  Forfeiture  to  Government  for  want  of  bidder. — In  case 
there  is  no  bidder  for  real  property  exposed  for  sale  as  hereinabove 
provided  or  if  the  highest  bid  is  for  an  amount  insufficient  to  pay 
the  taxes,  penalties,  and  costs,  the  provincial  treasurer  shall  declare 
the  property  forfeited  to  the  Government  in  satisfaction  of  the  claim 
in  question  and  within  two  days  thereafter  shall  make  a  return  of  his 
proceedings  and  the  forfeiture,  which  shall  be  spread  upon  the  rec- 
ords of  his  office. 

Within  one  year  from  the  date  of  such  forfeiture  the  taxpayer,  or 
anyone  for  him,  may  redeem  said  property  by  paying  to  the  pro- 
vincial treasurer  the  full  amount  of  the  taxes  and  penalties,  together 
with  interest  thereon  and  costs  of  sale;  but  if  the  property  be  not 
thus  redeemed,  the  forfeiture  shall  become  absolute. 

[2657—1741.] 

SEC.  1600.  Resale  of  real  estate  taken  for  7V,/r*.-*-The  collector  of 
internal  revenue  shall  have  charge  of  any  real  estate  obtained  by 
the  government  of  the  Philippine  Islands  in  payment  or  satisfaction 
of  debts,  taxes,  penalties,  or  costs  arising  under  the  internal  revenue 
law  or  in  compromise  or  adjustment  of  any  claim  therefor;  and  said 
collector  may  upon  the  giving  of  not  less  than  20  days'  notice  sell 
and  dispose  of  the  same  at  public  auction,  or  with  the  prior  approval 
of  the  department  head,  may  dispose  of  the  same  at  private  sale.  In 
either  case  the  proceeds  of  the  sale  shall  be  deposited  in  the  Philip- 
pine treasury,  and  an  account  of  the  same  shall  be  rendered  to  the 
auditor. 

[2657—1742.] 

'SEC.  1601.  Further  distraint  or  levy. — The  remedy  by  distraint  of 
personal  property  and  levy  on  realty  may  be  repeated  if  necessary 
until  the  full  amount  due,  including  all  expenses,  is  collected. 

[2657—1743.] 


RATIFICATION  OF  INTERNAL-REVENUE  TAXES. 


S  OF  CONGRESS. 

'HAP.  101. — Aii  Act  Making  appropriations  to  supply  urgent  deficiencies  in  the 
appropriations  for  the  fiscal  year  ending;  June  thirtieth,  nineteen  hundred  and 
nine. 

******* 

Tl 

ernn 


WAR   DEPARTMENT. 


'hat  the  internal-revenue  taxes  imposed  by  the  Philippine  gov- 
tment  and  collected  under  sections  one  hundred  and  nine  and  one 
hundred  and  thirty-nine  of  Act  Numbered  Eleven  hundred  and 
eighty-nine  of  the  Philippine  Commission,  and  under  Acts  Num- 
bered Fourteen  hundred  and  sixty-one  and  Seventeen  hundred  and 
sixty-one  of  the  Philippine  Commission  are  hereby  legalized  and 
ratified,  and  the  collection  of  all  such  taxes  heretofore  or  hereafter 
is  hereby  legalized  and  ratified  and  confirmed  as  fully  to  all  intents 
and  purposes  as  if  the  same  had  by  prior  Act  of  Congress  been 
specifically  authorized  and  directed. 

*  *  *  *  *  *  * 

(Approved  Feb.  9,  1909,  Public  No.  222,  35  Stat.  L.,  p.  614.) 


CHAP.  147.— An  Act  Making  appropriations  to  supply  deficiencies  in  appro- 
priations for  the  fiscal  year  nineteen  hundred  and  fifteen  and  for  prior  years, 
and  for  other  purposes. 

*  *  #  *  *  *  * 

AVAR   DEPARTMENT. 
INTEKNAL-KEVENUE    TAXES,    PHILIPPINE    ISLANDS. 

The  internal-revenue  taxes  imposed  by  the  Philippine  Legislature 
under  the  law  enacted  by  that  body  on  December  twenty-third,  nine- 
teen hundred  and  fourteen,  as  amended  by  the  law  enacted  by  it  on 
January  sixteenth,  nineteen  hundred  and  fifteen,  are  hereby  legalized 
and  ratified,  and  the  collection  of  all  such  taxes  heretofore  or  here- 
after is  hereby  legalized,  ratified,  and  confirmed  as  fully  to  all  iir 
tents  and  purposes  as  if  the  same  had  by  prior  Act  of  Congress  been 
specifically  authorized  and  directed. 

*  *  •'=  •:•  *  *  * 

(Approved  Mar.  4, 1915,  Public  No.  296,  38  Stat.  L.,  p.  1138.) 
52853—21 5  65 


66  INTERNAL   REVENUE   LAWS. 

CHAP.  92.  —  An  Act  Making  appropriations  to  supply  additional  urgent  de- 
licienck'S  in  appropriations  for  the  fiscal  year  ending  June  thirtieth,  nineteeiii 
hundred  and  eighteen,  on  account  of  war  expenses  and  for  other  purposes. 


WAR  DEPARTMENT. 

******* 
BUKEAU   OF   INSULAR   AFFAIRS. 

The  taxes  imposed  by  the  Philippine  Legislature  in  section  four- 
teen hundred  and  fifty-nine  of  the  Act  Numbered  Twenty-seven  hun- 
dred and  eleven,  enacted  by  that  body  on  March  tenth,  nineteen  hun- 
dred and  seventeen,  are  hereby  legalized  and  ratified,  and  the  col- 
lection of  all  such  taxes  heretofore  or  hereafter  is  legalized,  ratified, 
and  confirmed  hereby  as  fully  to  all  intents  and  purposes  as  if  the 
same  by  prior  Act  of  Congress  specifically  had  been  authorized  and 
directed. 

******* 

(Approved  June  4,  1918,  Public  No.  164,  40  Stat.  L.,  p.  594.) 


CHAP.  253. — An  Act  Making  appropriations  to  supply  deficiencies  in  appro- 
priations for  the  fiscal  year  ending  June  30,  1920,  and  prior  fiscal  years,  and 
for  other  purposes. 


WAR    DEPARTMENT. 

*  *  *  *  *  *  * 

BUKEAU  OF  INSULAR  AFFAIRS. 

The  taxes  imposed  by  the  Philippine  Legislature  in  section  1614r 
of  the  Act  Numbered  2657,  enacted  by  that  body  on  February  24,, 
1916,  are  legalized  and  ratified,  and  the  collection  of  all  such  taxes, 
made  under  or  by  authority  of  such  Act  of  the  Philippine  Legisla- 
ture is  legalized,  ratified,  and  confirmed  as  fully  to  all  intents  andl 
purposes  as  if  the  same  had  by  prior  Act  of  Congress  been  specifically 
authorized  and  directed. 

*  *  *  *  *  *  * 

(Approved  June  5, 1920,  Public  No.  264,  41  Stat.  L.,  p.  1015.) 


OFFENSES  AGAINST  INTERNAL-REVENUE  LAWS. 


[From  Administrative  Code,  1917.] 


Chapter  66.— OFFENSES   CONNECTED  WITH  ADMINISTRATION   OF 
VARIOUS  BUREAUS  AND  OFFICES. 


t 
AHTICLE 


XII. — Offenses  connected  icith  adniinixti'ation  of  Bureau  of  Internal 
Revenue. 


SEC.  2714.  Statutory  offenses  of  officers  and  employees. 

SEC.  2715.  Reward  of  informer. 

SEC.  2716.  Unlawful  divulgence  of  trade  secrets. 

SEC.  2717.  Unlawful  interest  of  revenue  officer  in  business. 

SEC.  2718.  Delinquency  in  payment  of  cedula  tax. 

SEC.  2719.  Unlawful  use  of  cedula  certificate. 

SEC.  2720.  Falsification  or  counterfeiting  of  stamp  or  cedula  certificate. 

SEC.  2721.  Failure  to  affix  and  cancel  documentary  stumps  and  destroy  internal- 
revenue  stamps  and  labels. 

SEC.  2722.  Unlawful  pursuit  of  business  or  occupation. 

SEC.  2723.  Failure  to  make  true  return  of  receipts  and  sales, 

SEC.  2724.  Unlawful  use  of  denatured  alcohol. 

SEC.  2725.  Forfeiture  of  goods  illegally  stored  or  removed. 

SEC.  2726.  Forfeiture  of  property  used  in  unlicensed  business. 

SEC.  2727.  Unlawful  removal  of  articles  without  payment  of  tax, 

SEC.  2728.  Punishment  for  subsequent  offense. 

SEC.  2729.  Unlicensed  signs,  signboards,  or  billboards. 

SEC.  2730.  Shipment  of  liquor  or  tobacco  under  false  name  or  brand, 

SEC.  2731.  Procuring  unlawful  divulgeuce  of  trade  secrets. 

SEC.  2732.  Fraudulent  practices  relative  to  weights  and  measures. 

SEC.  2733.  Unlawful  possession  or  use  of  instrument  not  sealed  within  12  months-. 

SEC.  2734.  Alteration  or  fraudulent  use  of  instrument  of  weight  or  measure. 

SEC.  2735.  Payment  of  informers. 

SEC.  2736.  Illegal  sale  of  skimmed  milk. 

SEC.  2737.  Unlawful  removal  of  mining  products. 

SEC.  2738.  Failure  to  keep  pharmacist's  record. 

SEC.  2739.  Unlawful  delivery  of  property  or  transfer  of  shares,  obligations, 
bonds,  or  rights  subject  to  inheritance  tax. 

SEC.  2740.  Concealment  of  property  subject  to  inheritance  tax. 

SEC.  2741.  Violation  of  internal-revenue  law  or  regulation  in  general. 


ARTICLE    XII. — OFFENSES    CONNECTED    WITH    ADMINISTRATION    OF 
BUREAU  OF  INTERNAL  REVENUE. 

SEC.  2714.  Statutory  offenses  of  officers  and  employees. — Every 
officer,  agent,  or  employee  of  the  Bureau  of  Internal  Revenue  who 
is  guilty  of  any  delinquency  hereinbelow  specified,  or  who  falls  within 

67 


68  INTERNAL    REVENUE  LAWS, 

any  of  the  classes  hereinbelow  indicated,  shall  be  punished  by  a  fine 
of  not  less  than  iOO  pesos  nor  more  than  10,000  pesos,  or  by  im- 
prisonment for  not  less  than  six  months  nor  more  than  five  years-, 
or  both. 

(('}  Those  guilty  of  extortion  or  willful  oppression  under  color 
of  law. 

(6)  Those  who  knowingly  demand  other  or  greater  sums  than 
are  authorized  by  law  or  receive  any  fees,  compensation,  or  reward, 
except  as  by  law  prescribed,  for  the  performance  of  any  duty. 

(c)  Those  who  willfully  neglect  to  give  receipts,  as  by  law  re- 
quired, for  any  sums  collected  in  the  performance  of  duty,  or  who 
willfully  neglect  to  perform  any  of  the  duties  enjoined  by  law. 

(<7)  Those  who  conspire  or  collude  with  another  or  others  to 
defraud  the  revenues  or  otherwise  violate  the  law. 

(e)  Those  who  willfully  make  opportunity  for  any  pet-son  to 
defraud  the  revenues,  or  who  do  or  omit  to  do  any  act  with  intent 
to  enable  any  other  person  to  defraud  the  revenues. 

(/)  Those  who  negligently  or  designedly  permit  the  violation 
of  the  law  by  any  other  person. 

(g)  Those  who  make  or  sign  any  false  entry  or  entries  in  any 
book,  or  make  or  sign  any  false  certificate  or  return  in  any  case 
where  the  law  requires  the  making  by  them  of  such  entry,  certifi- 
cate, or  return. 

(h)  Those  who,  having  knowledge  or  information  of  a  violation 
of  the  intenal-revenue  law  or  of  any  fraud  committed  on  the  revenues 
collectible  by  the  Bureau  of  Internal  Revenue,  fail  to  report  such 
knowledge  or  information  to  their  superior  officer,  or  to  report  as 
otherwise  required  by  law. 

(i)  Those  who,  without  the  authority  of  law,  demand  or  accept, 
or  attempt  to  collect,  directly  or  indirectly  as  payment  or  otherwise, 
any  sum  of  money  or  other  thing  of  value  for  the  compromise,  ad- 
justment, or  settlement  of  any  charge  or  complaint  for  any  violation 
or  alleged  violation  of  law. 

[2657—2702.] 

SEC.  2715.  Reward  of  informer. — In  case  of  a  conviction  under  the 
preceding  section  one-half  of  any  fine  imposed  shall  be  for  the  use 
of  the  Insular  Government  and  the  other  half  for  the  use  of  the 
informer,  who  shall  be  ascertained  and  named  in  the  judgment  of 
the  court. 

[2657—2703.] 

SEC.  2716.  (As  amended  by  sec.  30,  act  No.  2833.)  Unlawful  divulgence 
of  trade  secrets. — Any  officer  or  employee  of  the  Bureau  of  Internal 
Revenue  who  divulges  to  any  person  or  makes  known  in  any  other 
manner  than  may  be  provided  by  law  information  regarding  the  busi- 


OFFENSES  AGAINST   INTERNAL-REVENUE   LAWS.  69 

ness  or  income  of  any  taxpayer,  the  secrets,  operation,  style  of  work, 
or  apparatus  of  any  manufacturer  or  producer,  or  confidential  infor- 
mation regarding  the  business  of  any  taxpayer,  knowledge  of  which 
was  acquired  by  him  in  the  discharge  of  his  official  duties,  shall  be 
fined  in  a  sum  not  more  than  2,000  pesos  or  be  imprisoned  for  a  term 
of  not  less  than  six  months  nor  more  than  five  years,  or  both. 

[2657—2704.] 

SEC.  2717.  (As  amended  by  sec.  15,  act  No.  2835.)  Unlawful  interest 
of  revenue  officers  in  business. — Any  internal-revenue  officer  who  is 
or  shall  become  interested,  directly  or  indirectly,  in  the  manufacture, 
sale,  export,  or  import  of  manufactured  tobacco,  snuff,  cigars,  or 
cigarettes,  or  in  the  distilling,  repacking,  sale,  import,  export,  recti- 
fication, or  redistillation  of  distilled  spirits,  or  in  the  manufacture, 
repacking,  export,  import,  or  sale  of  fermented  liquors,  or  in  the 
manufacture  or  sale  of  any  scale  or  balance,  weight,  or  measure,  shall 
be  fined  in  a  sum  not  less  than  400  pesos  nor  more  than  10,000  pesos. 

12657—2705.] 

SEC.  2718.  Delinquency  in  payment  of  cedula  tax. — A  person 
liable  to  the  cedula  tax  who  remains  delinquent  in  the  payment  of  the 
same  for  15  days  after  June  1  of  each  year,  and  who  upon  demand  of 
the  provincial  treasurer  fails  thereafter  to  pay  such  tax  as  required 
by  law,  shall  be  deemed  to  be  guilty  of  a  misdemeanor;  and  the  pro- 
vincial treasurer  may,  in  his  discretion,  cause  the  delinquent  to  be 
prosecuted  before  the  justice  of  the  peace  of  the  municipality  in  which 
the  delinquent  shall  be  found,  and  upon  conviction  the  person  so  de- 
linquent shall  be  sentenced  to  imprisonment  for  five  days  for  each 
unpaid  cedula. 

Persons  so  convicted  shall  be  required  to  labor  for  the  period  of 
imprisonment,  either  for  the  province,  municipality,  or  township 
upon  public  works  in  such  manner  as  may  be  directed  by  the  pro- 
vincial board ;  and  upon  the  termination  of  such  period  of  imprison- 
ment or  labor  a  cedula  certificate  shall  be  issued  to  the  person  so 
convicted  as  if  the  tax  had  been  paid  in  money.  But  at  any  time 
after  sentence  is  passed,  and  before  the  labor  is  fully  rendered  in 
obedience  thereto,  the  defendant  shall  have  the  right  to  pay  the  en- 
tire amount  of  the  delinquent  tax,  together  with  the  costs  of  the  trial, 
or,  if  he  be  declared  insolvent,  the  amount  of  the  delinquency  only; 
and  thereupon  he  shall  be  discharged  and  a  cedula  shall  be  issued  to 
him  as  in  other  cases. 

In  any  prosecution  for  the  nonpayment  of  the  cedula  tax,  proof 
showing  that  such  tax  was  not  paid  in  the  municipality,  township, 
or  city  where  the  defendant  resides  shall  be  sufficient  to  convict  in 
the  absence  of  proof  on  his  part  showing  that  the  tax  was  lawfully 
paid  in  some  other  place  or  province. 


70  INTERNAL   REVENUE   LAWS. 

In  prosecutions  arising  under  this  section  in  Mindoro,  Palawan, 
and  Batanes  the  delinquent  shall  in  all  cases  be  originally  tried  in  a 
court  of  inferior  jurisdiction  established  in  the  municipality  or  town- 
ship, or  before  the  nearest  court  of  the  same  category,  if  there  be 
none  in  the  municipality  or  township,  or  if  the  delinquent  resides  out- 
side of  the  limits  thereof;  and  the  defendant  shall  be  entitled  to 
appeal  to  the  competent  court  of  first  instance. 

[2657—2706.] 

SEC.  2719.  Unlawful  use  of  cedula  certificate. — Any  person  who 
uses,  attempts  to  use,  or  has  in  his  possession  with  intent  to  defraud 
the  revenues,  deceive  the  courts,  or  mislead  any  revenue  officer  or 
other  person,  any  cedula  certificate  issued  to  any  other  person  shall 
be  fined  in  a  sum  not  exceeding  200  pesos  or  be  imprisoned  for  a 
term  not  exceeding  six  months. 

[2657—2707.] 

SEC.  2720.  Falsification  or  counterfeiting  of  stamp  or  cedulo 
tificate. — Any  person  who  makes,  sells,  or  uses  any  false  or  counter- 
feit stamp  or  cedula,  or  any  die  for  printing  or  making' stamps  or 
cedulas,  which  is  in  imitation  of  or  purports  to  be  a  lawful  stamp, 
cedula,  or  die  of  the  kind  required  by  the  provisions  of  the  internal- 
revenue  law,  or  who  erases  the  cancellation  marks  on  any  stamp 
previously  used,  or  who  alters  the  written  or  printed  figures  or  let- 
ters or  cancellation  marks  on  any  stamp  previously  used,  or  who 
has  in  his  possession  any  such  false,  counterfeit,  restored,  or  altered 
stamp,  die,  or  cedula  for  the  purpose  of  using  the  same  in  the  pay- 
ment of  internal  revenue  or  in  securing  any  exemption  or  privilege 
conferred  by  the  internal-revenue  law,  or  who  procures  the  com- 
mission of  any  such  offense  by  another,  shall  for  each  offense  be 
fined  in  a  sum  not  less  than  200  pesos  nor  more  than  5,000  pesos,  and 
imprisoned  for  a  term  not  less  than  two  months  nor  more  than  five 
years. 

[2657—2708.] 

SEC.  2721.  (As  amended  by  sec.  16,  act  No.  2835.)  Failure  to  affix  and 
cancel  documentary  stamps  and  destroy  internal-revenue  stamps  and 
labels. — Any  person  who  fails  to  affix  and  cancel  the  requisite  stamp 
or  stamps  to  any  document  at  the  time  required  by  law  shall  be  sub- 
ject to  a  fine  of  not  more  than  300  pesos.  Any  person  who  gives 
away  or  accepts  from  another,  or  who  sells,  buys,  or  uses  any  con- 
tainer on  which  the  stamps  or  labels  are  not  utterly  destroyed,  shall  for 
each  such  offense  be  fined  in  a  sum  of  not  less  than  20  pesos  nor  more 
than  300  pesos,  or  by  imprisonment  for  a  term  not  exceeding  seven 
months,  or  both,  at  the  discretion  of  the  court.  Any  internal-revenue 
officer  may  destroy  any  emptied  container  upon  which  an  internal- 
revenue  stamp  or  official  tax-paid  label  is  found  still  undestroyed. 

[2657—2709.] 


OFFENSES  AGAINST   INTERNAL-REVENUE   LAWS.  71 

SEC.  2722.   (As  amended  by  sec.  17,  act  No.  2835.)    Unlawful  pursuit 
of  business  or  occupation. — Any  person  who  distills,  rectifies,  re- 
packs, or  sells  at  wholesale  or  retail  any  liquor  or  wines,  maim-  • 
factured  tobacco,  snuff,  cigars,  or  cigarettes,  or  who  deals  in  any 
manufactured  product  of  tobacco,  without  having  paid  the  privilege- 
tax  therefor  as  required  by  law,  or  who  knowingly  aids  or  abets 
in  the  conduct  of  illicit  distilling  operations,  or  illicit  manufacture 
of  tobacco  products,  shall,  in  addition  to  being  liable  for  the  pay- 
ment of  such  tax,  be  punished  by  a  fine  in  a  sum  not  less  than  200 
pesos  nor  more  than  2,000  pesos,  or  by  imprisonment  for  a  term  not 
exceeding  six  months,  or  both;  and  in  the  case  of  a  distiller,  re- 
packer,  or  rectifier  of  spirits  or  manufacturer  of  any  products  of 
tobacco  so  offending,   all   distilled   spirits   and   all   stills   or   other 
apparatus  fit  or  intended  for  the  distillation,  repacking,  or  rectifi- 
cation of  spirits,  or  for  the  compounding  of  liquors,  or  for  the 
manufacture  of  any  products  of  tobacco,  owned  by  such  person, 
wherever  found,  and  all  distilled  spirits  or  wines  or  manufactured 
tobacco  and  personal  property  found  at  the  distillery,  repacking, 
or  rectify  ing.  establishment  or  at  the  tobacco  factory  or  in  any  build- 
ing, room,  yard,  or  inclosure  connected  therewith  and  used  with  or 
constituting  a  part  of  the  premises  on  which  the  distilling,  repack- 
ing, or  rectifying  of  distilled  spirits  or  manufacturing  of  tobacco 
is  carried  on ;  and  all  the  right,  title,  and  interest  of  such  person  in 
the  lot  or  tract  of  land  on  which  such  distillery,  repacking,  or  recti- 
fying establishment  or  tobacco  factory  is  situated,  and  all  the  right, 
title,  and  interest  therein  of  every  person  who  knowingly  or  with 
negligence  has  suffered  or  permitted  the  business  of  a  distiller,  re- 
packer,  or  rectifier  of  spirits  or  manufacturer  of  tobacco  to  be  there 
carried  on  or  has  connived  at  the  same,  shall  be  forfeited  to  the 
Government. 

Any  person  who  carries  on  any  other  business,  or  pursues  any 
calling  for  which  a  fixed  privilege  tax  is  imposed  without  paying 
such  tax  as  required  by  law  or  who  knowingly  aids  or  abets  in  the 
conduct  of  such  business,  shall  in  addition  to  being  liable  to  the 
payment  of  such  tax  be  punished  by  a  fine  in  a  sum  not  exceeding 
1,000  pesos  or  by  imprisonment  for  a  term  not  exceeding'six  months, 
or  both. 

[2657—2710.] 

SEC.  2723.  Failure  to  inake  true  return  of  receipts  and  sales. — 
Any  person  who,  being  required  by  law  to  make  a  return  of  the 
amount  of  his  receipts,  sales,  or  business,  shall  fail  or  neglect  to 
make  such  return  within  the  time  required  shall  be  punished  by 
a  fine  not  exceeding  2,000  pesos  or  by  imprisonment  for  a  term  not 
exceeding  one  year,  or  both.  And  any  such  person  who  shall  make 


72  INTERNAL   REVENUE   LAWS. 

a  false  or  fraudulent  return  shall  be  punished  by  a  fine  not  exceed- 
ing 10,000  pesos  or  by  imprisonment  for  a  term  not  exceeding  two 
years,  or  both. 

[2657—2711.1 

SEC.  2724.  Unlawful  use  of  denatured  alcohol. — Any  person  who, 
for  the  purpose  of  manufacturing  any  beverage,  uses  denatured 
alcohol  or  alcohol  withdrawn  from  bond  for  industrial  uses,  or  who 
knowingly  sells  any  beverage  made  in  whole  or  in  part  from 
such  alcohol,  or  who  uses  such  alcohol  for  the  manufacture  of  liquid 
medicinal  preparations,  or  knowingly  sells  such  preparations  contain- 
ing as  an  ingredient  such  alcohol,  shall  on  conviction  be  fined  not 
more  than  1,000  pesos  or  be  imprisoned  for  not  more  than  one  year, 
or  both. 

Any  person  who  shall  unlawfully  recover  or  attempt  to  recover 
by  redistillation  or  other  process  any  denatured  alcohol  or  who 
knowingly  uses,  sells,  conceals,  or  otherwise  disposes  of  alcohol  so 
recovered  or  redistilled  shall  be  subject  to  the  same  penalty  as  above 
provided. 

[2657—2712.] 

SEC.  2725.  Forfeiture  of  goods  illegally  stored  or  removed. — All 
articles  subject  to  a  specific  tax  which  are  stored  or  allowed  to  remain 
in  a  distillery,  distillery  warehouse,  bonded  warehouse,  or  other 
place  where  made,  after  the  tax  thereon  has  been  paid,  shall  be  for- 
feited ;  and  all  such  articles  unlawfully  removed  from  any  such  place 
without  the  payment  of  the  required  tax  shall  likewise  be  forfeited. 

[2657—2713.] 

SEC.  2726.  Forfeiture  of  property  used  in  unlicensed  business. — All 
chattels,  machinery,  and  removable  fixtures  of  any  sort  used  in  the 
production  of  distilled  spirits,  cigars,  cigarettes,  or  other  manufac- 
tured products  of  tobacco,  when  the  required  tax  has  not  been  paid 
for  such  business,  shall  be  forfeited. 

[2657—2714.] 

SEC.  2727.  Unlawful  removal  of  articles  without  payment  of  tax. — 
Any  manufacturer,  owner,  or  person  in  charge  of  any  article  subject 
to  a  specific  tax  who  removes  or  allows  or  procures  the  unlawful 
removal  of  any  such  article  from  the  place  of  manufacture  or  bonded 
warehouse  upon  which  article  the  specific  tax  has  not  been  paid  in 
the  time  and  manner  required,  and  every  person  who  knowingly 
aids  or  abets  in  the  removal  of  such  articles  as  aforesaid,  or  con- 
ceals the  same  after  illegal  removal,  shall  for  the  first  offense  be 
punished  by  a  fine  of  not  more  than  1,000  pesos  or  imprisonment  not 
longer  than  six  months,  or  both. 


OFFENSES    AGAINST    I  NTKKX  AL-KKVKN  I"  K    1,A\VS.  73 

Every  manufacturer  so  offending  shall,  before  continuing  or  resum- 
ing business,  execute  a  bond  in  double  the  amount  of  his  original  bond 
and  containing  the  same  conditions. 

[2657—2715.] 

SP:C.  2728.  Punishment  for  subsequent  offence. — In  case  of  rein- 
cidence  the  offender  under  the  preceding  section  shall  be  punished 
by  imprisonment  for  not  less  than  one  month  nor  more  than  two 
years;  and  if  the  offense  be  committed  by  the  owner  or  the  manu- 
facturer, or  by  his  connivance,  the  factory  and  the  ground  upon 
which  it  stands,  including  the  machinery  and  apparatus  used  in  arid 
about  the  business,  shall  be  forfeited  to  the  Government. 

[2657—2716.] 

SEC.  2729.  Unlicensed  signs,  signboards,  or  billboards. — (Repealed 
by  sec.  1,  act  No,  2819.) 

[2657—2717.] 

SEC.  2730.  Shipment  of  liquor  or  tobacco  under  false  name  or 
brand. — Any  person  who  ships,  transports,  or  removes  spirituous  or 
fermented  liquors,  wines,  or  tobacco  under  any  other  than  the  proper 
name  or  brand  known  to  the  trade  as  designating  the  kind  and 
quality  of  the  contents  of  the  cask  or  package  containing  the  same, 
or  causes  such  act  to  be  done,  shall  be  subject  to  a  fine  of  500  pesos,, 
and  in  addition  the  article  or  articles  so  transported  or  removed  shall 
be  forfeited. 

[2657—2718.] 

SEC.  2731.  (As  amended  by  sec.  31,  act  No.  2833.)  Procuring  unlawful 
divulgence  of  trade  secrets. — Any  person  who  causes  or  procures  an 
officer  or  employee  of  the  Bureau  of  Internal  Revenue  to  divulge 
any  confidential  information  regarding  the  business  or  income  of 
any  taxpayer,  knowledge  of  which  was  acquired  by  him  in  the  dis- 
charge of  his  official  duties,  and  which  it  is  unlawful  for  him  to 
reveal,  and  any  person  who  publishes  or  prints  in  any  manner  what- 
ever, not  provided  by  law,  any  income,  profits,  losses,  or  expenditures 
appearing  in  any  income-tax  return,  shall  be  fined  in  a  sum  not  more 
than  2,000  pesos  or  be  imprisoned  for  a  term  of  not  less  than  six 
months  nor  more  than  five  years,  or  both. 

[2657—2719.] 

SEC.  2732.  Fraudulent  practices  relative  to  weights  and  meas- 
ures.— Any  person  other  than  an  official  sealer  of  weights  and  meas- 
ures who  places  an  official  tag  or  seal  upon  any  instrument  of  weight 
or  measure,  or  attaches  it  thereto,  and  any  person  who  fraudulently 
imitates  any  mark,  stamp,  brand,  tag,  or  other  characteristic  sign 
used  to  indicate  that  weights  and  measures  have  been  officially  sealed ; 
or  who  alters  in  any  way  the  certificate  given  by  the  sealer  as  an 


74  INTERNAL    REVENUE    LAWS. 

acknowledgment  that  the  weights  and  measures  mentioned  therein 
have  been  duly  sealed,  or  who  makes  or  knowingly  sells  or  uses  any 
false  or  counterfeit  stamp,  tag.  certificate,  or  license,  or  any  die  for 
printing  or  making  stamps,  tags,  certificates,  or  licenses,  which  is  an 
imitation  of  or  purports  to  be  a  lawful  stamp,  tag,  certificate,  or 
license  of  the  kind  required  by  the  provisions  of  the  internal-revenue 
law,  or  who  alters  the  written  or  printed  figures  or  letters  on  any 
stamp,  tag,  certificate,  or  license  used  or  issued  or  who  has  in  his 
possession  any  such  false,  counterfeit,  restored,  or  altered  stamp, 
tag,  certificate,  or  license  for  the  purpose  of  use  or  reuse  of  the  same 
in  the  payment  of  fees  or  charges  imposed  in  the  internal- re  venue 
law,  or  who  procures  the  commission  of  any  such  offense  by  another, 
shall  for  each  such  offense  be  fined  not  less  than  200  pesos  nor  more 
than  10,000  pesos,  and  shall  be  imprisoned  for  not  less  than  one  month 
nor  more  than  five  years,  in  the  discretion  of  the  court. 

[2657—2720.] 

SEC.  2733.  Unlawful  possession  or  use  of  instrument  not  sealed 
within  12  months. — Any  person  making  a  practice  of  buying  or  sell- 
ing goods  by  weight  or  measure,  or  of  furnishing  services  the  value 
of  which  is  estimated  by  weight  or  measure,  who  has  in  his  posses- 
sion without  permit  any  scale,  balance,  weight,  or  measure  which 
has  not  been  officially  sealed  within  12  months,  and  any  person  who 
uses  in  any  purchase  or  sale  or  in  estimating  the  value  of  any  service 
furnished  any  such  instrument  that  has  not  been  officially  sealed 
within  the  same  period,  shall  be  punished  by  a  fine  not  exceeding 
500  pesos  or  by  imprisonment  for  not  exceeding  one  year,  or  by 
both,  in  the  discretion  of  the  court ;  but  if  such  scale,  balance,  weight, 
or  measure  so  used  has  been  officially  sealed  at  some  previous  time 
and  the  seal  and  tag  officially  affixed  thereto  remain  intact  and  in 
the  same  position  and  condition  in  which  they  were  placed  by  the 
official  sealer,  and  the  instrument  is  found  not  to  have  been  altered 
or  rendered  inaccurate,  but  still  to  be  sufficiently  accurate  to  warrant 
its  being  sealed  without  repairs  or  alteration,  such  instrument  shall, 
if  presented  for  sealing  promptly  on  demand  of  any  authorized 
sealer  or  inspector  of  weights  and  measures,  be  sealed,  and  the 
owner,  possessor,  or  user  of  same  shall  be  subject  to  no  penalty  ex- 
cept a  surcharge  equal  to  five  times  the  regular  fee  fixed  by  law  for 
the  sealing  of  an  instrument  of  its  class,  this  surcharge  to  be  col- 
lected and  accounted  for  by  the  same  official  and  in  the  same  manner 
as  the  regular  fees  for  sealing  such  instruments. 

[2657—2721.] 

SEC.  2734.  Alteration  or  fraudulent  use  of  instrument  of  weight  or 
measure. — Any  person  who  with  fradulent  intent  alters  any  scale  or 


OFFENSES   AGAINST   INTERNAL-REVENUE   LAWS.  75 

'balance,  weight,  or  measure  after  it  is  officially  sealed,  or  who  know- 
ingly uses  any  false  scale  or  balance,  weight,  or  measure,  whether 
sealed  -or  not,  shall  be  punished  by  a  fine  of  not  less  than  200  pesos, 
nor  more  than  4,000  pesos,  or  by  imprisonment  for  not  less  than 
three  months  nor  more  than  two  years,  or  both. 

Any  person  who  fradulently  gives  short  weight  or  measure  in  the 
making  of  a  sale,  or  who  fradulently  takes  excessive  weight  or 
measure  in  the  making  of  a  purchase,  or  who,  assuming  to  determine 
truly  the  weight  or  measure  of  any  article  bought  or  sold  by 
weight  or  measure,  fraudulently  misrepresents  the  weight  or  measure 
thereof,  shall  be  punished  by  a  fine  of  not  less  than  50  pesos  nor  more 
than  2,000  pesos,  or  by  imprisonment  for  not  less  than  three  months 
nor  more  than  two  years,  or  both. 

[2657—2722.] 

SEC.  2735.  Payment  of  informers. — Any  person,  except  an  internal- 
revenue  agent  or  officer  or  other  public  official  engaged  in  sealing  or 
inspecting  weights  and  measures,  who  voluntarily  gives  information 
leading  to  the  arrest  and  conviction  of  anyone  violating  the  provi- 
sions of  the  internal-revenue  law  relative  to  weights  and  measures, 
shall  be  rewarded  in  the  sum  of  20  pesos  or  in  the  sum  of  100  pesos 
if  the  person  convicted  is  a  public  officer  or  employee  concerned  with 
the  sealing  or  inspecting  of  weights  and  measures.  The  informer 
shall  be  ascertained  and  stated  in  the  judgment  of  the  court,  and  the 
reward  paid  shall  be  a  charge  against  the  funds  of  the  province  in 
which  the  arrest  and  conviction  is  had  and  the  municipality  con- 
cerned, in  the  proportion  in  which  the  weights  and  measures  fees 
accrue  to  each;  but  to  prevent  delay  in  payment  the  province  shall 
initially  pay  the  entire  amount  and  subsequently  secure  reimburse- 
ment of  the  municipality's  share. 

[2657—2723.] 

SEC.  2736.  Illegal  sale  of  skimmed  milk. — Any  person  who  sells  or 
puts  on  sale  in  the  Philippine  Islands  any  condensed  skimmed  milk 
or  milk  from  which  the  fat  has  been  removed  totally  or  in  part,  on 
which  the  tax  imposed  bj  the  internal-revenue  law  has  not  been  fully 
paid,  or  which  does  not  bear  the  legend  provided  for  therein,  shall, 
upon  conviction  thereof,  be  punished  by  a  fine  of  not  exceeding  600 
pesos,  or  by  imprisonment  not  exceeding  six  months,  or  both. 

[2657—2724.] 

SEC.  2737.  Unlawful  removal  of  mining  products. — Any  conces- 
sionaire, manager,  owner,  or  person  in  charge  of  any  mining  prod- 
ucts upon  which  the  ad  valorem  tax  herein  imposed  is  applicable,  who 
unlawfully  removes,  or  who  allows  or  procures  the  unlawful  removal 
-of  any  such  products  from  the  place  where  mined,  upon  which  said 


76  INTERNAL   REVENUE   LAWS. 

ad  valorem  tax  has  not  been  paid  in  the  time  and  manner  required, 
and  every  person  who  knowingly  aids  or  abets  in  the  removal  of  such 
articles  as  aforesaid  or  conceals  the  same  after  their  illegal  removal, 
shall  for  the  first  offense  be  punished  by  a  fine  of  not  more  than  1,000 
pesos  or  imprisonment  for  not  longer  than  six  months,  or  both,  and 
the  products  so  unlawfully  removed  shall  be  forfeited.  In  case  of 
reincidence  the  offender  under  this  section  shall  be  punished  by  im- 
prisonment for  not  less  than  one  month  nor  more  than  two  years,  and 
if  the  offense  be  committed  by  the  concessionaire,  owner,  or  manager 
of  the  mine,  or  by  his  connivance,  the  mining  concession  and  all  min- 
ing rights  in  the  property,  including  the  machinery  and  apparatus 
used  in  and  about  the  mine,  and  all  the  products  unlawfully  re- 
moved, shall  be  forfeited  to  the  Government. 
[2657—2725.] 

SEC.  2738.  Failure  to  keep  pharmacist's  record.—^,  physician, 
dentist,  veterinarian,  pharmacist,  or  second-class  pharmacist  who 
fails  to  keep  a  true  and  correct  record  of  prohibited  drugs  received 
and  dispensed  or  transferred  by  him,  as  required  by  law  and  pre- 
scribed in  the  regulations  of  the  Bureau  of  Internal  Revenue,  or 
who  fails  to  allow  the  immediate  inspection  of  his  entire  stock  of 
such  drugs  upon  the  demand  of  any  internal-revenue  officer  or  agent, 
shall  be  punished  by  a  fine  of  not  less  than  50  pesos  nor  more  than 
1,000  pesos. 

[2657—2726.] 

SEC.  2739.  (As  amended  by  sec.  18,  act  No.  2835.)  Unlawful  delivery 
of  property  or  transfer  of  shares.  obligations*  bonds,  or  rights  sub- 
ject to  inheritance  tax. — The  executor  or  judicial  administrator  who 
shall  deliver  to  an  heir,  legatee,  or  donee,  any  real  or  personal  prop- 
erty, credit,  right,  or  franchise,  and  the  officer,  manager,  or  em- 
ployee of  any  corporation,  "  sociedacl  anonima,"  partnership,  busi- 
ness, or  ^industry  who  transfers  in  its  books  to  any  new  owner  any 
share,  obligation,  bond,  or  right,  pertaining  to  an  inheritance  sub- 
ject to  the  tax  imposed  in  Article  XI  of  the  internal-revenue  law 
without  its  payment  being  shown  shall  be  punished  by  a  fine  of  not 
more  than  5,000  pesos,  or  imprisonment  for  not  more  than  six 
months,  or  by  both  penalties. 

[2601—12.] 

SEC.  2740.  Concealment  of  property  subject  to  inheritance  tax.— 
A  donee,  legatee,  or  heir  who  conceals  any  goods,  rights,  credits,  or 
transfers  subject  to  the  tax  imposed  in  article  11  of  the  internal- 
revenue  law  shall  be  punished  by  a  fine  of  not  less  than  25  per  cent 
of  the  value  of  that  which  he  may  have  concealed,  nor  more  than  said 


OFFKNSKS    AGAINST    !  NTKRXAL-RKVKXUK    LAWS.  77 

lue,  or  by  imprisonment  for  not  more  than  one  year,  or  by  both 
.^nalties. 
[2601—14.] 

SEC;.  2741.  Violation  of  internal- revenue  law  or  regulation  in  (je ti- 
ll.— A  person  who  violates  any  provision  of  the  internal-revenue, 
law,  or  any  lawful  regulation  of  the  Bureau  of  Internal  Revenue 
made  in  conformity  with  the  same,  for  which  delinquency  no  specific 
penalty  is  provided  by  law,  shall  be  punished  by  a  fine  of  not  more 
than  300  pesos  or  by  imprisonment  for  not  more  than  six  months, 
or  both. 

657—2727.] 


i 
ere 


INTERNAL-REVENUE  ALLOTMENT  LAW. 


[From  Administrative  Code,  1917.] 
Chapter  19.— INTERNAL-REVENUE  ALLOTMENT  LAW. 

PRELIMINARY  ARTICLE. — Title  of  cliapter. 
SEC.  484.  Title  of  chapter. 

ARTICLE  I. — Special  disposition  of  certain  internal  revenue. 

SEC.  485.  Disposition  of  fees  for  sealing  weights  and  measures. 

SEC.  486.  Disposition  of  proceeds  of  certain  license  taxes.    . 

SEC.  487.  Disposition  of  proceeds  of  cedula  tax. 

SEC.  488.  Disposition  of  proceeds  of  taxes  on  franchises. 

SEC.  489.  Disposition  of  proceeds  of  income  and  inheritance  taxes. 

ABTICLE  II. — Disposition  and  allotment  of  internal  revenue  in  general. 

SEC.  490.  Disposition  of  internal  revenue  in  general. 

SEC.  491.  Allotments  of  internal  revenue  for  special  purposes. 

SEC.  492.  Apportionment  and  use  of  provincial  allotment. 

SEC.  493.  Apportionment  and  use  of  road  and  bridge  allotment. 

SEC.  494.  Apportionment  and  use  of  municipal  allotment. 

ARTICLE  III. — Miscellaneous  provisions. 

SEC.  495.  Status  of  cities,  townships,  and  other  local  governmental  divisions. 
SEC.  496.  Apportionment  to  be  based  upon  census  population. 
SEC.  497.  Warrants  for  quarterly  payment  of  allotments. 

PRELIMINARY  ARTICLE. — TITLE  OF  CHAPTER. 

SEC.  484.  Title  of  chapter. — This  chapter  shall  be  known  as  the- 
internal-revenue  allotment  law. 
[2657—585.] 

ARTICLE  I. — SPECIAL  DISPOSITION  or  CERTAIN  INTERNAL  REVENUE. 

SEC.  485.  Disposition  of  fees  for  sealing  weights  and  measures. — 
The  proceeds  of  fees  for  the  sealing  and  licensing  of  weights  and 
measures  shall  accrue  equally  to  the  province  and  municipality 
wherein  collected. 

[2657—586.] 

SEC.  486.  Disposition  of  proceeds  of  certain  license  taxes. — The 
proceeds  of  the  internal-revenue  license  taxes  on  theaters,  museums, 
cockpits,  concert  halls,  pawnbrokers,  circuses,  billiard  rooms,  and  re- 
tail dealers  in  tuba,  bassi,  tapuy,  or  like  domestic  fermented  liquors, 

79 


80  INTERNAL,  KEVKNUE  LAWS. 

shall  be  for  the  exclusive  benefit  of  the  municipality  wherein  the 
same  are  collected. 

[2657—587.] 

SEC.  487.  Disposition  of  proceeds  of  cedula  tax. — In  provinces 
where  the  cedula  tax  is  fixed  at  1  peso  its  proceeds  shall  go  equally  to 
the  province  and  municipality  wherein  collected.  In  provinces  where 
the  tax  is  fixed  at  2  pesos  the  extra  peso  shall  accrue  to  the  road  and 
bridge  fund  or  the  road  and  public  works  fund  of  the  province,  the 
other  peso  being  divided  equally  between  the  province  and  the  mu- 
nicipality, as  before.  The  proceeds  of  delinquent  payments  shall,  in 
either  case,  be  dealt  with  upon  the  same  principle. 

Such  portion  of  the  proceeds  of  the  cedula  tax  collected  in  the 
barrio  of  San  Jose,  on  Corregidor  Islands,  as  would,  under  the  pre- 
ceding paragraph,  accrue  to  the  road  and  bridge  fund  of  the  Prov- 
ince of  Cavite,  shall  hereafter  be  devoted  exclusively  to  school  pur- 
poses in  said  barrio. 

[2657—588.] 

SEC.  488.  Disposition  of  proceeds  of  taxes  on  franchises. — Where 
the  grantee  of  any  franchise,  his  lessees,  successors,  or  assigns  have 
issued  bonds  with  interest  guaranteed  by  the  Government  of  the 
Philippine  Islands  the  franchise  tax  shall  accrue  in  its  entirety  to 
the  Insular  Government  until  the  guaranty  ceases. 

Taxes  upon  franchises  whose  obligations  are  not  thus  guaranteed 
shall  be  applied  as  follows: 

(a)  Where  the  franchise  is  for  the  operation  of  a  submarine  tele- 
graphic cable,  the  entire  franchise  tax  shall  accrue  to  the  insular 
government. 

(b)  Where  the  franchise  is  for  a  steam  railroad  or  marine  rail- 
way  operating   in   one   or   more   municipalities   five-tenths   of   the 
franchise  tax  shall  accrue  to  the  insular  government,  two-tenths  to 
the  province  or  provinces  concerned,  and  three-tenths  to  the  mu- 
nicipality or  municipalities  concerned;  and  where  more  than  one 
province  participates  in  the  provincial  share,  only  so  much  of  their 
population  shall  be  considered  in  making  the  division  as  is  found 
in  the  municipality  or  municipalities  wherein  the  franchise  is  oper- 
ated in  the  particular  province. 

(c)  Where  the  franchise  is  for  an  electric  or  tramway  line  operat- 
ing in  one  or  more  municipalities  one-fifth  of  the  franchise  tax  shall 
accrue  to  the  insular  government,  one-fifth  to  the  province  or  prov- 
inces concerned,  and  three-fifths  to  the  municipality  or  municipali- 
ties concerned;  and  where  more  than  one  province  participates  the 
same  rule  of  apportionment  shall  be  observed  as  in  the  subsection 
preceding. 


INTERNAL-REVENUE   ALLOTMENT   LAW.  81 


(d)  Where  the  franchise  is  for  the  operation  of  a  public-service 
plant  or  system  different  from  those  specified  above,  and  the  same 
is  doing  business  in  one  or  more  municipalities,  one-fifth  of  the 
franchise  tax  shall  accrue  to  the  insular  government,  one-fifth  to 
the  province  or  provinces  concerned,  and  three-fifths  to  the  munici- 
pality or  municipalities  concerned ;  and  where  more  than  one  prov- 
ince or  municipality  participates  the  apportionment  shall  be  in 
proportion  to  the  gross  receipts  from  the  business  transacted  within 
their  respective  limits. 

[2657—589.]      (Reference:  See  sec.  15,  act  No.  2831.) 

SEC.  489.  (As  amended  by  sec.  27,  act  No.  2833.)  Disposition  of  pro- 
ceeds of  income  and  inheritance  taxes. — The  proceeds  of  the  tax  on 
income  and  of  the  tax  on  inheritances,  legacies,  and  other  acquisi- 
tions mortis  causa  shall  accrue  to  the  insular  government. 

[2601—17,  18.] 

ARTICLE  II. — DISPOSITION  AND  ALLOTMENT  or  INTERNAL  REVENUE 

IN  GENERAL. 

SEC.  490.  Disposition  of  internal  revenue  in  general. — Internal 
revenue  collected  under  the  laws  of  the  Philippine  Islands  and  not 
applied  as  hereinabove  provided  or  otherwise  specially  disposed  of 
by  law  shall  accrue  to  the  insular  treasury,  and  shall  be  available 
for  the  general  purposes  of  the  Government,  with  the  exception  of 
the  amounts  set  apart  by  way  of  allotment  under  the  next  succeed- 
ing section. 

[2657—590.] 

SEC.  491.  Allotments  of  internal  revenue  for  special  purposes. — 
Of  the  internal  revenue  accruing  to  the  insular  treasury  under  the 
preceding  section  there  shall  be  set  apart  10  per  centum  as  a  pro- 
vincial allotment,  10  per  centum  as  a  road  and  bridge  allotment,  and 
20  per  centum  as  a  municipal  allotment ;  but  the  amounts  allotted  to 
said  several  purposes  during  any  year  shall  not  be  greater  than  the 
amount  allotted  for  the  same  purposes  during  the  fiscal  year  1909. 

[2657—591.] 

SEC.  492.  Apportionment  and  use  of  provincial  allotment. — The 
provincial  allotment  shall  be  apportioned  to  the  treasuries  of  the 
several  respective  provinces  and  shall  there  accrue  to  their  general 
funds,  respectively. 

[2657—592.] 

SEC.  493.  Apportionment  and  use  of  road  and  bridge  allotment. — 
The  road  and  bridge  allotment  shall  be  apportioned  among  provinces 
wherein  the  road  tax  continues  in  force,  as  in  the  Mountain  Province 
and  Nueva  Vizcaya  and  other  provinces  wherein  the  annual  cedula 
tax  is  fixed  or  maintained  at  2  pesos. 
52853—21 6 


82  INTERNAL   REVENUE   LAWS. 

Shares  in  the  road  and  bridge  allotment  shall  accrue,  respectively, 
to  the  road  and  public  works  fund  or  road  and  bridge  fund,  as  the 
case  may  be,  of  the  governmental  division  participating  therein. 

[2657—593.] 

SEC.  494.  Apportionment  and  use  of  municipal  allotment. — The 
municipal  allotment  shall  be  for  the  benefit  of  the  inhabitants  of  the 
islands  in  the  purview  of  their  community  requirements,  being  avail- 
able for  municipal  or  other  use  as  hereinbelow  provided. 

In  regularly  organized  provinces  containing  non-Christian  in- 
habitants so  much  of  the  municipal  allotment  available  for  a  par- 
ticular province  as  pertains  to  its  non-Christian  inhabitants  shall 
accrue  to  its  non-Christian  inhabitants'  fund. 

In  specially  organized  provinces  so  much  of  the  municipal  allot- 
ment available  for  a  particular  province  as  does  not  pertain  to 
municipalities  or  chartered  cities  shall  accrue  to  the  township  and 
settlement  fund  of  such  province. 

Such  part  of  the  municipal  allotment  as  is  not  applied  as  herein- 
above  provided  shall  be  distributed  among  the  various  municipali- 
ties and,  except  as  regards  the  city  of  Baguio,  shall  accrue  in  equal 
proportions  to  their  general  funds  and  school  funds.  The  share  of 
the  city  of  Baguio  shall  accrue  wholly  to  its  general  fund. 

[2657—594.1 

ARTICLE  III. — MISCELLANEOUS  PROVISIONS. 

SEC.  495.\  Status  of  cities,  townships,  and  other  local  governmental 
divisions. — For  purposes  of  the  allotment  of  internal  revenue,  a 
chartered  city,  township,  or  other  Ideal  governmental  division  not 
constituting  part  of  a  municipality  proper  shall  have  the  status  of  a 
municipality  and  shall  be  deemed  to  be  included  under  the  term 
"  municipality  "  as  used  in  this  chapter. 

The  city  of  Manila  shall  receive  the  shares  which  it  would  receive 
if  it  were  both  a  municipality  and  a  regularly  organized  province, 
and  for  the  purposes  hereof  shall  be  deemed  to  be  both  the  one  and 
the  other. 

[2657—595..] 

SEC.  496.  Apportionment  to  l)e  based  upon  census  population. — 
Apportionments  of  internal  revenue  under  the  provisions  of  this 
chapter  shall  be  based  on  population  as  shown  by  the  official  census, 
but  until  a  new  census  is  taken  or  population  otherwise  determined 
according  to  law  the  proportionate  share  of  the  Mountain  Province 
and  Nueva  Vizcaya  and  of  the  hill  people  in  the  Province  of  Samar 
shall  be  taken  to  be  the  same  as  in  the  apportionment  of  1916 : 

Provided,  however,  That  in  determining  the  amount  of  internal- 
revenue  funds  to  be  allotted  to  the  provinces  comprised  within  the 


INTERN AL-REVENUE   ALLOTMENT   LAW. 


83 


department   of   Mindanao   and    Sulu,   the   auditor   shall   take    into 
account  the  total  approximate  population  of  said  provinces  as  certi- 
fied to  him  by  the  Secretary  of  the  Interior. 
[2657—596.] 

SEC.  497.  Warrants  for  quarterly  payment  of  allotments. — The 
yment  of  the  internal-revenue  allotments  shall  be  made  from  the 
ular  treasury  quarterly  upon  warrants  drawn  by  the  collector  of 
rnal  revenue. 
857—597.] 


INCOME-TAX  LAW. 


[Fourth  Philippine  Legislature,  third  session.     H.  No.  1576.] 
[No.  2833.] 

act  establishing  the  income  tax,  making  other  provisions  relating  to  said  tax, 
and  amending  certain  sections  of  act  numbered  twenty-seven  hundred  and 
eleven. 

Be  it  enacted  by  the  Senate  and  House  of  Representatives  of  the 
Philippines  in  Legislature  assembled  and  ~by  the  authority  of  the 
same : 

CHAPTER  I. — ON  INDIVIDUALS. 

SECTION  1.  (As  amended  by  sec.  1,  act  No.  2926.)  (a)  There  shall  be 
levied,  assessed,  collected,  and  paid  annually  upon  the  entire  net  in- 
come received  in  the  preceding  calendar  year  from  all  sources  by 
every  individual,  a  citizen  or  resident  of  the  Philippine  Islands,  a 
tax  of  3  per  centum  upon  such  income ;  and  a  like  tax  shall  be  levied, 
assessed,  collected,  and  paid  annually  upon  the  entire  net  income  re- 
ceived in  the  preceding  calendar  year  from  all  sources  within  the 
Philippine  Islands  by  every  individual,  a  nonresident  alien,  includ- 
ing interest  on  bonds,  notes,  or  other  interest-bearing  obligations  of 
residents,  corporate  or  otherwise. 

(b)  In  addition  to  the  income  tax  imposed  by  subdivision  (a)  of 
this  section,  herein  referred  to  as  the  normal  tax,  there  shall  be  levied, 
assessed,  collected,  and  paid  upon  the  total  net  income  of  every  in- 
dividual, or,  in  the  case  of  a  nonresident  alien,  the  total  net  income 
received  from  all  sources  within  the  Philippine  Islands,  an  addi- 
tional income  tax,  herein  referred  to  as  the  additional  tax,  of  one- 
half  of  1  per  cent  per  annum  upon  the  amount  by  which  such 
total  net  income  exceeds  10,000  pesos  and  does  not  exceed  20,000  pesos ; 
1  per  cent  per  annum  upon  the  amount  by  which  such  total  net 
income  exceeds  20,000  pesos  and  does  not  exceed  30,000  pesos;  1J 
per  cent  per  annum  upon  the  amount  by  which  such  total  net  in- 
come exceeds  30,000  pesos  and  does  not  exceed  40,000  pesos;  2  per 
cent  per  annum  upon  the  amount  by  which  such  total  net  income 
exceeds  40,000  pesos  and  does  not  exceed  50,000  pesos;  2J  per  cent 
per  annum  upon  the  amount  by  which  such  total  net  income  exceeds 
50,000  pesos  and  does  not  exceed  60,000  pesos ;  3  per  cent  per  annum 
upon  the  amount  by  which  such  total  net  income  exceeds  60,000 
pesos  and  does  not  exceed  70,000  pesos ;  3£  per  cent  per  annum  upon 

85 


86  IXTKHXAL    REVENUE   LAWS. 

the  amount  by  which  such  total  net  income  exceeds  70,000  pesos  and 
does  not  exceed  80,000  pesos ;  4  per  cent  per  annum  upon  the  amount 
by  which  such  total  net  income  exceeds  80,000  pesos  and  docs  not 
exceed  90.000  pesos;  4J  per  cent  per  annum  upon  the  amount  by 
which  such  total  net  income  exceeds  90,000  pesos  and  does  not  exceed 
100,000  pesos ;  5  per  cent  per  annum  upon  the  amount  by  which  such 
total  net  income  exceeds  100,000  pesos  and  does  not  exceed  120,000 
pesos:  5^  per  cent  per  annum  upon  the  amount  by  which  such  total 
net  income  exceeds  120,000  pesos  and  does  not  exceed  140,000  pesos; 
6  per  cent  per  annum  upon  the  amount  by  which  such  total  net  in- 
come exceeds  140,000  pesos  and  does  not  exceed  160,000  pesos;  (H 
per  cent  per  annum  upon  the  amount  by  which  such  total  net  income 
exceeds  160,000  pesos  and  does  not  exceed  200,000  pesos;  7  per  cent 
per  annum  upon  the  amount  by  which  such  total  net  income  exceeds 
200.000  pesos  and  does  not  exceed  250,000  pesos;  8  per  cent  per  an- 
num upon  the  amount  by  which  such  total  net  income  exceeds  250,000 
pesos  and  does  not  exceed  300,000  pesos ;  9  per  cent  per  annum  upon 
the  amount  by  which  such  total  net  income  exceeds  300,000  pesos 
and  does  not  exceed  400,000  pesos;  10  per  cent  per  annum  upon  the 
amount  by  which  such  total  net  income  exceeds  400,000  pesos  and  does 
not  exceed  500,000  pesos;  11  per  cent  per  annum  upon  the  amount 
by  which  such  total  net  income  exceeds  500,000  pesos  and  does  not 
exceed  700.000  pesos;  12  per  cent  per  annum  upon  the  amount  by 
which  such  total  net  income  exceeds  700.000  pesos  and  does  not  ex- 
ceed 900,000  pesos;  13  per  cent  per  annum  upon  the  amount  by 
which  such  total  net  income  exceeds  900,000  pesos  and  does  not  exceed 
1,200,000  pesos;  14  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  1,200,000  pesos  and  does  not  exceed 
1,500,000  pesos;  15  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  1,500,000  pesos  and  does  not  exceed 
2,000,000  pesos;  16  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  2,000,000  pesos  and  does  not  exceed 
2,500,000  pesos;  17  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  2,500,000  pesos  and  does  not  exceed 
3,000,000  pesos ;  18  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  3,000,000  pesos  and  does  not  exceed 
4.000,000  pesos;  19  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  4,000,000  pesos  and  does  not  exceed 
5,000,000  pesos;  20  per  cent  per  annum  upon  the  amount  by  which 
such  total  net  income  exceeds  5,000,000  pesos. 

For  the  purposes  of  the  additional  tax  there  shall  be  included  as 
income  the  income  derived  from  dividends  or  net  earnings  subject 
to  the  tax  established  in  subsection  (a)  of  section  10. 

All  the  provisions  of  this  law  relating  to  the  normal  tax  on  indi- 
viduals, so  far  as  they  are  applicable  and  are  not  inconsistent  with 


INCOME-TAX    LAW. 

this  subdivision  and  section  three,  shall  apply  to  the  imposition,  levy, 
assessment,  and  collection  of  the  additional  tax  imposed  under  this 
subdivision. 

(c)  The  foregoing  normal  and  additional  tax  rates  shall  apply  to 
the  entire  net  income,  except  as  hereinafter  provided,  received  by 
every  taxable  person  in  the  calendar  year  1920  and  in  each  year  there- 
after. 

INCOME  DEFINED. 

SEC.  2.  (As  amended  by  sec.  2,  act  No.  2926.)  (a)  Subject  only  to 
such  exemptions  and  deductions  as  are  hereinafter  allowed,  the  tax- 
able net  income  of  a  person  shall  include  gains,  profits,  and  income 
derived  from  salaries,  wages,  or  compensation  for  personal  service 
of  whatever  kind  and  in  whatever  form  paid,  or  from  professions, 
vocations,  businesses,  trade,  commerce,  sales,  or  dealings  in  property, 
whether  real  or  personal,  growing  out  of  the  ownership  or  use  of  or 
interest  in  real  or  personal  property,  also  from  interest,  rent,  divi- 
dends, securities,  or  the  transaction  of  any  business  carried  on  for  gain 
or  profit,  or  gains,  profits,  and  income  derived  from  any  source  what- 
ever. 

(b)  Income  received  by  estates  of  deceased  persons  during  the  pe- 
riod of  administration  or  settlement  of  the  estate  shall  be  subject  to 
the  normal  and  additional  tax  and  taxed  to  their  estates,  and  also 
such  income  of  estates  or  any  kind  of  property  held  in  trust,  includ- 
ing such  income  accumulated  in  trust  for  the  benefit  of  unborn  or 
unascertained  persons,  or  persons  with  contingent  interests,  and  in- 
come held  for  future  distribution  under  the  terms  of  the  will  or  trust 
shall  be  likewise  taxed,  the  tax  in  each  instance,  except  when  the  in- 
come is  returned  for  the  purpose  of  the  tax  by  the  beneficiary,  to  be 
assessed  to  the  executor,  administrator,  or  trustee,  as  the  case  may  be : 
Provided,  That  where  the  income  is  to  be  distributed  annually  or 
regularly  between  existing  heirs  or  legatees  or 'beneficiaries,  the  rate 
of  tax  and  method  of  computing  the  same  shall  be  based  in  each  case 
upon  the  amount  of  the  individual  share  to  be  distributed. 

Such  trustees,  executors,  administrators,  and  other  fiduciaries  are 
hereby  indemnified  against  the  claims  or  demands  of  every  bene- 
ficiary for  all  payments  of  taxes  which  they  shall  be  required  to  make 
under  the  provisions  of  this  law,  and  they  shall  have  credit  for  the 
amount  of  such  payments  against  the  beneficiary  or  principal  in  any 
accounting  which  they  make  as  such  trustees  or  other  fiduciaries. 

(c)  The  gain  derived  or  loss  sustained  from  the  sale  or  other  dis- 
position of  property,  real,  personal,  or  mixed,  shall  be  determined  in 
accordance  with  the  following  schedule : 

(1)  In  the  case  of  property  acquired  before  March  1, 1913,  the  fair 
market  price  or  value  of  such  property  as  of  March  1. 1913. 


88  INTERNAL   REVENUE   LAWS. 

(2)  In  the  case  of  property  acquired  on  or  before  March  1,  1913? 
the  fair  market  price  or  value  of  such  property  as  of  the  date  of  the 
acquisition  thereof. 

(3)  In  the  case  of  the  exchange  of  one  piece  of  property  for  an- 
other, the   property   received  in  exchange  shall   be   considered   as- 
equivalent  of  money  in  a  sum  equal  to  its  fair  market  value  on  the 
date  on  which  the  exchange  was  made. 

(d)  Whenever,  in  the  judgment  of  the  collector  of  internal 
revenue,  the  taking  of  an  inventory  of  property  is  necessary  in 
order  to  determine  the  income  of  a  taxpayer,  the  latter  shall  make 
an  inventory  in  such  form  as  said  collector  may  prescribe. 

ADDITIONAL  TAX  IS  LEVIED  ON  UNDISTRIBUTED  PROFITS. 

SEC.  3.  For  the  purpose  of  the  additional  tax,  the  taxable  income 
of  any  individual  shall  include  the  share  to  which  he  would  be  en- 
titled of  the  gains  and  profits,  if  divided  or  distributed,  whether 
divided  or  distributed  or  not,  of  all  corporations,  joint-stock  com- 
panies, partnerships,  joint  accounts  (cuentas  en  participation),  asso- 
ciations, or  insurance  companies,  however  created  or  organized,, 
when  such  gains  or  profits  have  been  fraudulently  accumulated  or 
retained  for  the  purpose  of  evading  the  payment  of  the  additional  tax 
upon  them;  and  the  fact  that  any  such  corporation,  joint-stock  com- 
pany, partnership,  joint  account  (cuentas  en  participacion),  asso- 
ciation, or  insurance  company,  is  a  mere  holding  company,  or  that 
the  gains  and  profits  are  permitted  to  accumulate  beyond  the  reason- 
able needs  of  the  business,  shall  be  prima  facie  evidence  of  a  fraudu- 
lent purpose  to  escape  such  tax;  but  the  fact  that  the  gains  and 
profits  are  in  any  case  permitted  to  accumulate  and  become  surplus 
shall  not  be  construed  as  evidence  of  a  purpose  to  escape  the  said 
tax  in  such  case  unless  the  secretary  of  finance  shall  certify  that  in 
his  opinion  such  accumulation  is  unreasonable  for  the  purposes  of  the 
business.  When  requested  by  the  collector  of  internal  revenue  such 
corporation,  joint-stock  company,  partnership,  joint  account  (cuenta 
en  participacion),  association,  or  insurance  company  shall  forward  to 
him  a  correct  statement  of  such  gains  and  profits  and  the  names  and 
addresses  of  the  individuals  or  shareholders  who  would  be  entitled 
to  the  same  if  divided  or  distributed. 

INCOME    EXEMPT    BY    LAW. 

SEC.  4.  The  following  incomes  shall  be  exempt  from  the  provisions 
of  this  law : 

(a)  The  proceeds  of  life-insurance  policies  paid  to  beneficiaries 
upon  the  death  of  the  insured. 


INCOME-TAX   LAW.  89' 

(b)  The  amount  received  by  the  insured,  as  a  return  of  premium 
premiums  paid  by  him  under  life  insurance,  endowment,  or  an- 
nuity contracts,  either  during  the  term  or  at  the  maturity  of  the 
term  mentioned  in  the  contract  or  upon  surrender  of  the  contract. 

(c)  The  value  of  property  acquired  by  gift,  bequest,  devise,-er^ 
descent;  but  the  income  from  such  property  shall  be  included  as 

Kme. 
I)   Interest  upon  the  obligations  of  the  United  States  to  the  ex- 
provided  in  the  act  authorizing  the  issue  thereof ;  interest  upon 
the  obligations  of  the  Government  of  the  Philippine  Islands  or  any 
political  subdivision  thereof,  but  in  the  case  of  such  obligations 
issued  after  January  1,  1919,  only  to  the  extent  provided  in  the  act 
authorizing  the  issue  thereof. 

DEDUCTIONS    AND     CREDITS     ALLOWED! 

\ 

SEC.  5.  (As  amended  by  sec.  3,  act  No.  2926.)  (In  computing  net  in- 
come in  the  case  of  a  citizen  or  resident  of  the  Philippine  Islands — 

(a)  For  the  purpose  of  the  tax  there  shall  be  allowed  as  deduc- 
tions : 

First.  The  necessary  expenses  actually  paid  01;  incurred  in  carry- 
ing on  any  business  or  trade,  not  including  personal,  living,  or  fam- 
ily expenses. 

Second.  All  interest  paid  within  the  year  on  his  indebtedness  ex- 
cept on  indebtedness  incurred  for  the  purchase  of  obligations  or 
securities  the  interest  upon  which  is  exempt  from  taxation  as  in- 
come under  this  law. 

Third.  Taxes  paid  within  the  year  imposed  by  any  foreign  gov- 
ernment, by  the  Government  of  the  Philippine  Islands,  or  by  any 
province,  city,  municipality,  or  township,  not  including  those  assessed 
against  local  benefits. 

Fourth.  Losses  actually  sustained  during  the  year,  incurred  in 
his  business  or  trade,  or  arising  from  fires,  storms,  shipwreck,  or 
other  casualty,  and  from  theft,  when  such  losses  are  not  compensated 
for  by  insurance  or  otherwise. 

Fifth.  In  transactions  entered  into  for  profit  but  not  connected 
with  his  business  or  trade  the  losses  actually  sustained  therein  dur- 
ing the  year  not  compensated  for  by  insurance  or  otherwise. 

Sixth.  Debts  due  to  the  taxpayer  actually  ascertained  to  be  worth- 
less and  charged  off  within  the  year. 

Seventh.  A  reasonable  allowance  for  deterioration  of  property 
arising  out  of  its  use  or  employment  in  the  business  or  trade,  or  out 
of  its  not  being  used. 

Eighth,  (a)  In  the  case  of  oil  and  gas  wells  a  reasonable  allow- 
ance for  actual  reduction  in  flow  and  production  to  be  ascertained 


90  INTERNAL   REVENUE   LAWS. 

not  by  the  flush  flow,  but  by  the  .settled  production  or  regular  flow ; 
(b)  in  the  case  of  mines  a  reasonable  allowance  for  depletion  thereof 
not  to  exceed  the  market  value  in  the  mine  of  the  product  thereof, 
which  has  been  mined  and  sold  during  the  year  for  which  the  return 
and  computation  are  made,  such  reasonable  allowance  to  be  made  in 
the  case  of  both  (a)  and  (b)  under  rules  and  regulations  to  be  pre- 
scribed by  the  collector  of  internal  revenue  with  the  approval  of  the 
secretary  of  finance :  Provided,  That  when  the  allowances  authorized 
in  (a)  and  (b)  shall  equal  the  capital  originally  invested,  or  in  case 
of  purchase  made  prior  to  March  1,  1913,  the  fair  market  value  as  of 
that  date,  no  further  allowance  shall  be  made.  No  deduction  shall  be 
allowed  for  any  amount  paid  out  for  new  buildings,  permanent  im- 
provements, or  betterments,  made  to  increase  the  value  of  any  prop- 
erty, and  no  deduction  shall  be  made  for  any  amount  of  expense  of 
restoring  property  or  making  good  the  exhaustion  thereof  for  which 
an  allowance  is  or  has  been  made. 

Xinth.  Contributions  or  gifts  actually  paid  or  made  within  the 
year  to  corporations  or  associations  organized  and  operated  exclu- 
sively for  religious,  charitable,  scientific,  or  educational  purposes,  or 
to  societies  for  the  prevention  of  cruelty  to  children  or  animals,  no 
part  of  the  net  income  of  which  inures  to  the  benefit  of  any  private 
stockholder  or  individual,  to  an  amount  not  in  excess  of  5  per  centum 
of  the  taxpayer's  taxable  net  income  as  computed  without  the  benefit 
of  this  paragraph.  Such  contributions  or  gifts  shall  be  allowable  as 
deductions  only  if  verified  under  rules  and  regulations  prescribed  by 
the  collector  of  internal  revenue  with  the  approval  of  the  secretary 
of  finance. 

(b)  For  the  purpose  of  the  normal  tax  only,  the  income  embraced 
in  a  personal  return  shall  be  credited  with  the  amount  received  as 
dividends  or  net  profits  subject  to  the  tax  established  in  subsection 
(a)  of  section  10. 

(c)  A  like  credit  shall  be  allowed  as  to  the  amount  of  income,  the 
normal  tax  upon  which  has  been  paid  or  withheld  for  payment  at 
the  source  of  the  income  under  the  provisions  of  this  law. 

NONRESIDENT    ALIENS. 

SEC.  6.  (As  amended  by  sec.  4,  act  No.  2926.)  In  computing  net  in- 
come in  the  case  of  a  nonresident  alien — 

(a)  For  the  purpose  of  the  tax  there  shall  be  allowed  as  deduc- 
tions : 

First.  The  necessary  expenses  paid  or  incurred  in  carrying  on  any 
business  or  trade  conducted  by  him  within  the  Philippine  Islands, 
not  including  personal,  living,  or  family  expenses. 


IXCOME-TAX   LAW.  91 

Second.  The  proportion  of  all  interest  paid  within  the  year  by 
such  person  on  his  indebtedness,  except  on  indebtedness  incurred 
for  the  purchase  of  obligations  or  securities,  the  interest  upon  which 
is  exempt  from  taxation  as  income  under  this  law,  which  the  gross 
amount  of  his  income  for  the  year  derived  from  sources  within  Jthe^ 
Philippine  Islands  bears  to  the  gross  amount  of  his  income  for  the 
year  derived  from  all  sources  within  and  without  the  Philippine 
Islands;  but  this  deduction  shall  be  allowed  only  if  such  person 
includes  in  the  return  required  by  section  8  all  the  information 
necessary  for  its  calculation. 

Third.  Taxes  paid  within  the  year  imposed  by  the  Government 
of  the  United  States,  the  Government  of  the  Philippine  Islands,  or 
any  Province,  city,  municipality,  or  township,  paid  within  the 
Philippine  Islands,  not  including  those  assessed  against  local  benefits. 
Fourth.  Losses  actually  sustained  during  the  year  incurred  in 
business  or  trade  conducted  by  him  within  the  Philippine  Islands, 
and  losses  of  property  within  the  Philippine  Islands  arising  from 
fires,  storms,  shipwreck,  or  other  casualty,  and  from  theft,  when 
such  losses  are  not  compensated  for  by  insurance  or  otherwise. 

Fifth.  In  transactions  entered  into  for  profit  in  the  Philippine 
Islands  but  not  connected  with  his  business  or  trade,  the  losses 
actually  sustained  during  the  year  not  compensated  for  by  in- 
surance or  otherwise. 

Sixth.  Debts  arising  in  the  course  of  business  or  trade  conducted 
by  him  within  the  Philippine  Islands  due  to  the  taxpayer  actually 
ascertained  to  be  worthless  and  charged  off  within  the  year. 

Seventh.  A  reasonable  allowance  for  the  deterioration  of  property 
within  the  Philippine  Islands  arising  out  of  its  use  or  employment, 
or  its  nonuse,  in  the  business  or  trade :  (a)  In  the  case  of  oil  and 
gas  wells  a  reasonable  allowance  for  actual  reduction  in  flow  and 
production  to  be  ascertained  not  by  the  flush  flow,  but  by  the  settled 
production  or  regular  flow:  (Z>)  in  the  case  of  mines  a  reasonable 
allowance  for  depletion  thereof  not  to  exceed  the  market  value  in 
the  mine  of  the  product  thereof  which  has  been  mined  and  sold 
during  the  year  for  which  the  return  and  computation  are  made, 
such  reasonable  allowance  to  be  made  in  the  case  of  both  (a)  and 
(6)  under  rules  and  regulations  to  be  prescribed  by  the  collector 
of  internal  revenue  with  the  approval  of  the  secretary  of  finance: 
Provided,  That  when  the  allowance  authorized  in  (a)  and  (b)  shall 
equal  the  capital  originally  invested,  or  in  case  of  purchase  made 
prior  to  March  1,  1913,  the  fair  market  value  as  of  that  date,  no 
further  allowance  shall  be  made.  No  deduction  shall  be  allowed 
for  any  amount  paid  out  for  new  buildings,  permanent  improve- 
ments, or  betterments,  made  to  increase  the  value  of  any  property  or 


92  INTERNAL   EE VENUE   LAWS. 

estate,  and  no  reduction  shall  be  made  for  any  amount  of  expense 
of  restoring  property  or  making  good  the  exhaustion  thereof  for 
which  an  allowance  is  or  has  been  made. 

(&)  There  shall  also  be  allowed  the  credits  specified  by  subdivi- 
sions (fr)  and  (c)  of  section  5. 

(c)  A  nonresident  alien  individual  shall  receive  the  benefit  of  the 
deductions  and  credits  provided  for  in  this  section  only  by  filing  or 
causing  to  be  filed  with  the  collector  of  internal  revenue  a  true  and 
accurate  return  of  his  total  income,  received  from  all  sources,  cor- 
porate or  otherwise,  in  the  Philippine  Islands,  in  the  manner  pre- 
scribed by  this  law ;  and  in  case  of  his  failure  to  file  such  return  the 
collector  of  internal  revenue  shall  collect  the  tax  on  such  income. 

PERSONAL  EXEMPTION. 

SEC.  7.  (As  amended  by  sec.  5,  act  No.  2926.)  For  the  purpose  of  the- 
normal  tax  only  there  shall  be  allowed  as  an  exemption  in  the  nature 
of  a  deduction  from  the  amount  of  the  net  income  of  each  citizen  or 
resident  of  the  Philippine  Islands,  ascertained  as  provided  herein, 
the  sum  of  4,000  pesos  plus  2,000  pesos  additional  if  the  person  making 
the  return  be  a  married  man  with  a  wife  living  with  him,  or  plus  the 
sum  of  2,000  pesos  additional  if  the  person  making  the  return  be  a 
married  woman  with  a  husband  living  with  her  or  an  unmarried  man 
or  woman  with  parents  or  one  or  more  brothers  or  sisters  dependent 
upon  him  or  her ;  but  in  no  event  shall  this  additional  exemption  of 
2,000  pesos  be  deducted  by  both :  Provided.  That  only  one  deduction 
of  6,000  pesos  shall  be  made  from  the  aggregate  income  of  both  hus- 
band and  wife  when  living  together :  Provided,  further,  That  if  the 
person  making  the  return  is  the  head  of  a  family  there  shall  be  an 
additional  exemption  of  400  pesos  for  each  legitimate,  recognized 
natural  or  adopted  child  dependent  upon  such  person,  if  a  minor  or 
incapable  of  self-support  because  mentally  or  physically  defective: 
Provided,  further,  That  guardians  or  trustees  shall  be  allowed  to 
make  this  personal  exemption  as  to  income  derived  from  the  property 
of  which  such  guardian  or  trustee  has  charge  in  favor  of  each  ward 
or  cestui  que  trust :  Provided,  further,  That  in  no  event  shall  a  ward 
or  cestui  que  trust  be  allowed  a  greater  persona!  exemption  than 
as  provided  in  this  section,  from  the  amount  of  net  income  received 
from  all  sources.  There  shall  also  be  allowed  an  exemption  from 
the  amount  of  the  net  income  of  estates  of  deceased  citizens  or  resi- 
dents of  the  Philippine  Islands  during  the  period  of  administration 
or  settlement,  and  of  trusts  or  other  estates  of  citizens  or  residents 
of  the  Philippine  Islands  the  income  of  which  is  not  distributed  an- 
nually or  regularly  under  the  provisions  of  subdivision  (b)  of  sec- 
tion 2  the  sum  of  4,000  pesos,  including  such  deductions  as  are 
allowed  under  section  5. 


INCOME-TAX   LAW. 

A  nonresident  alien  shall  be  entitled  to  the  exemption  provided 
this  section  when  the  income-tax  law  in  the  country  of  which 
he  is  a  subject  or  citizen  allows  similar  exemption  to  citizens  of  the 
Philippines  not  residing  in  such  country,  provided  said  nonresident 
alien  files  a  true  and  accurate  return  of  the  total  income  received-by 
im  from  all  sources  in  the  Philippine  Islands,  as  required  by  this 


ti 


RETURNS. 


SEC.  8.  (As  amended  by  sec,  6,  act  No.  2926.)  (a)  The  tax  shall  be 
^computed  upon  the  net  income,  ascertained  in  accordance  with  the 
foregoing  provisions,  of  each  person  subject  thereto,  received  in  each 
preceding  calendar  year  ending  December  31. 

(1)  On  or  before  the  1st  day  of  March,  1921,  and  the  1st  day  of 
March  in  each  year  thereafter  a  true  and  accurate  return,  under  oath, 
;shall  be  made  by  each  person  of  lawful  age,  except  as  hereinafter 
provided,  having  an  income  of  4,000  pesos  or  over  for  the  taxable 
year  to  the  collector  of  internal  revenue  or  provincial  treasurer  of 
the  province  in  which  such  person  has  his  legal  residence  or  principal 
place  of  business,  or  if  there  be  no  legal  residence  or  place  of  business 
in  the  Philippine  Islands,  then  with  the  collector  of  internal  revenue, 
in  such  form  as  the  latter,  with  the  approval  of  the  secretary  of 
finance,  shall  prescribe,  setting  forth  specifically  the  gross  amount  of 
income  from  all  separate  sources  and  from  the  total  thereof  deduct- 
ing the  aggregate  items  of  allowances  herein  authorized :  Provided, 
That  the  collector  of  internal  revenue  shall  have  authority  to  grant 
a  reasonable  extension  of  time,  in  meritorious  cases,  for  filing  returns 
of  income :  Provided  further,  That  the  aforesaid  return  may  be  made 
by  an  agent  when  by  reason  of  illness,  absence,  or  nonresidence  the 
person  liable  for  said  return  is  unable  to  make  and  render  the  same, 
the  agent  assuming  the  responsibility  of  making  the  return  and 
incurring  penalties  provided  for  erroneous,  false,  or  fraudulent 
returns. 

(c)  Guardians,  trustees,  executors,  administrators,  receivers,  con- 
servators, and  all  persons,  corporations,  partnerships,  joint  accounts 
(cuentas  en  participacion) ,  or  associations,  acting  in  any  fiduciary 
capacity,  shall  render  a  return  of  the  income  of  the  person,  trust,  or 
estate  for  whom  or  which  they  act,  and  be  subject  to  all  the  provi- 
sions of  this  law  which  apply  to  individuals.  Such  fiduciary  shall 
make  oath  that  he  has  sufficient  knowledge  of  the  affairs  of  such  per- 
son, trust,  or  estate  to  enable  him  to  make  such  return  and  that  the 
same  is,  to  the  best  of  his  knowledge  and  belief,  true  and  correct,  and 
be  subject  to  all  the  provisions  of  this  law  which  apply  to  individuals : 
Provided,  That  a  return  made  by  one  of  two  or  more  joint  fiduciaries 
filed  in  the  province  where  such  fiduciary  resides,  under  such  regula- 


94  INTERNAL    EE  VENUE    LAWS. 

tions  as  the  collector  of  internal  revenue,  with  the  approval  of  the 
secretary  of  finance,  may  prescribe,  shall  be  a  sufficient  compliance 
with  the  requirements  of  this  paragraph :  Provided  further.  That 
no  return  of  income  not  exceeding  4,000  pesos  shall  be  required  except 
as  in  this  law  otherwise  provided. 

(d)  Persons  carrying  on  business  in  general  copartnership  (com- 
pania colectiva)  duly  registered  shall  be  liable  for  income  tax  only 
in  their  individual  capacity,  and  the  share  of  the  profits  of  the  gen- 
eral copartnership  (compania  colectiva)  to  which  any  taxable  part- 
ner would  be  entitled  if  the  same  were  divided,  whether  divided  or 
otherwise,  shall  be  returned  for  taxation  and  the  tax  paid  under  the 
provisions  of  this  law :  Provided,  That  from  the  net  distributive  in- 
terests on  which  the  individual  members  shall  be  liable  for  tax,  nor- 
mal and  additional,  there  shall  be  excluded  their  proportionate  shares 
received  from  interests  on  the  obligations  of  the  United  States  to  the 
extent  provided  in  the  act  authorizing  the  issue  thereof ;  interest  upon 
the  obligations  of  the  Government  of  the  Philippine  Islands  or  any 
political  subdivision  thereof;  but  in  the  case  of  such  obligations 
issued  after  January  1,  1919,  only  to  the  extent  provided  in  the  act 
authorizing  the  issue  thereof ;  and  that  for  the  purpose  of  computing 
the  normal  tax  there  shall  be  allowed  a  credit  for  their  proportionate- 
share  of  the  profits  derived  from  the  dividends  or  net  profits  subject 
to  the  tax  established  in  subsection  (a)  of  section  10.    Such  general 
copartnership  (compania  colectiva),  when  requested  by  the  collector 
or  internal  revenue  or  his  authorized  deputies,  shall  render  a  correct 
return  of  its  earnings,  profits,  and  income,  except  income  exempt 
under  section  4  of  this  act,  setting  forth  the  item  of  the  gross  income 
and  the  deductions  and  credits  allowed  by  this  law,  and  the  names 
and  addresses  of  the  individuals  who  would  be  entitled  to  the  net 
earnings,  profits,  and  income  if  distributed.     A  general  copartner- 
ship (compania  colectiva)  shall  have  the  same  privilege  of  fixing  its 
own  fiscal  year  and  making  returns  upon  the  basis  of  the  same  as 
accorded  to  corporations. 

(e)  An  individual  keeping  accounts  upon  any  basis  other  than, 
that  of  actual  receipts  and  disbursements,  unless  such  other  basis 
does  not  clearly  reflect  his  income,  may,  subject  to  regulations  made 
by  the  collector  of  internal  revenue,  with  the  approval  of  the  sec- 
retary of  finance,  make  his  return  upon  the  basis  upon  which  his 
accounts  are  kept,  in  which  case  the  tax  shall  be  computed  upon  his 
income  as  so  returned. 

ASSESSMENT. 

SEC.  9.  (a)  All  assessments  shall  be  made  by  the  collector  of  in- 
ternal revenue  and  all  persons  shall  be  notified  of  the  amount  for 
which  they  are  respectively  liable  on  or  before  the  1st  day  of  June  of 


INCOME-TAX   LAW. 

each  successive  year,  and  said  amounts  shall  be  paid  on  or  before  the 
15th  day  of  June,  except  in  cases  of  refusal  or  neglect  to  make  such 
return  and  in  cases  of  erroneous,  false,  or  fraudulent  returns,  in  which 
cases  the  collector  of  internal  revenue  shall,  upon  the  discovery 
thereof,  at  any  time  within  three  years  after  said  return  is  duepop 
has  been  made,  make  a  return  upon  information  obtained  as  pro- 
vided for  in  this  law  or  by  existing  law,  or  require  the  necessary  cor- 
rections, to  be  made,  and  the  assessment  made  by  the  collector  of  in- 
ternal revenue  thereon  shall  be  paid  by  such  person  or  persons  imme- 
diately upon  notification  of  the  amount  of  such  assessment;  and  to 
any  sum  or  sums  due  and  unpaid  after  the  15th  day  of  June  in  any 
year,  and  for  10  days  after  notice  and  demand  thereof  by  the  col- 
lector, there  shall  be  added  the  sum  of  5  per  centum  on  the  amount 
of  tax  unpaid,  and  interest  at  the  rate  of  1  per  centum  per  month 
upon  said  tax  from  the  time  the  same  became  due,  except  from  the 
estates  of  insane,  deceased,  or  insolvent  persons. 

(b)  All  persons,  corporations,  joint-stock  companies,  partnerships,, 
joint  accounts    (cuentas  en  participacion),  associations,  insurance 
companies,  and  general  copartnerships   (companias  colectivas),  in 
whatever  capacity  acting,  including  lessees  or  mortgagors  of  per- 
sonal property,  trustees  acting  in  any  trust  capacity,  'executors,  ad- 
ministrators, receivers,  conservators,  employers,  and  all  officers  and 
employees  of  the  government  of  the  Philippine  Islands  having  the 
control,  receipt,  custody,  disposal,  or  payment  of  interests,  rents, 
salaries,  wages,  premiums,  annuities,  compensations,  remunerations, 
emoluments,  or  other  fixed  or  determinable  annual  or  periodical 
gains,  profits,  and  income  of  any  nonresident  alien  individual,  other 
than  income  derived  from  dividends  or  net  profits  subject  to  the  tax 
established  in  subsection   (a)    of  section  10  are  hereby  authorized 
and  required  to  deduct  and  withhold  from  such  annual  or  periodical 
gains,  profits,  and  income  such  sum  as  will  be  sufficient  to  pay  the 
normal  tax  thereon,  and  shall  make  return  thereof  on  or  before 
March  1  of  each  year,  and.  on  or  before  the  time  fixed  by  law  for  the 
payment  of  the  tax,  shall  pay  the  amount  withheld  to  the  officer  of 
the  government  of  the  Philippine  Islands  authorized  to  receive  the 
same ;  and  they  are  each  hereby  made  personally  liable  for  such  tax,, 
and  they  are  each  hereby  indemnified  against  every  person,  corpora- 
tion,  joint-stock  company,  partnership,  joint  account    (cuenta   eni 
participacion),  association,  or  insurance  company,  or  demand  what- 
soever by  reason  of  the  payment  of  the  said  tax. 

(c)  The  normal  tax  hereinbefore  imposed  shall  also  be  deducted 
and  withheld  from  fixed  or  determinable  annual  or  periodical  gains, 
profits,  and  income  derived  from  interest  upon  bonds  and  mortgages,, 
or  deeds  of  trust  or  other  similar  obligations  of  corporations,  joint- 
stock    companies,    partnerships,    joint    accounts    (cuentas    en    par- 


96  IXTEBNAL    REVENUE   LAWS. 

ticipacion),  associations,  and  insurance  companies  if  such  bonds, 
mortgages,  or  other  obligations  contain  a  contract  or  provision  by 
which  the  obligor  agrees  to  pay  any  portion  of  the  tax  imposed  by 
this  law  upon  the  obligee  or  to  reimburse  the  obligee  for  any  por- 
tion of  the  tax  or  to  pay  the  interest  without  deduction  for  any  tax 
which  the  obligor  may  be  required  or  permitted  to  pay  thereon  or 
to  retain  therefrom  under  any  law  of  the  Philippine  Islands,  whether 
payable  annually  or  at  shorter  or  longer  periods  and  whether  such 
interest  is  payable  to  a  nonresident  alien  individual  or  to  a  citizen 
or  resident  of  the  Philippine  Islands,  subject  to  the  provisions  of  the 
foregoing  subdivision  (b)  of  this  section  requiring  the  tax  to  be 
withheld  at  the  source  and  deducted  from  annual  income  and  re- 
turned and  paid  to  the  Government,  unless  the  person  entitled  to 
receive  such  interest  shall  file  with  the  withholding  agent,  on  or 
before  Februaray  1,  a  signed  notice  in  writing  claiming  the  benefit, 
of  an  exemption  under  section  7  of  this  law. 

(d)  All  persons,  corporations,  joint-stock  companies,  partnerships, 
joint  accounts   (cuentas  en  participacion),  associations,  or  general 
copartnerships    (companfas   colectivas)    undertaking   for   profit   or 
otherwise  the  collection  of  foreign  payments  of  interest  or  dividends 
by  means  of  coupons,  checks,  or  bills  of  exchange  shall  obtain  a  license 
from  the  collector  of  internal  revenue,  and  shall  be  subject  to  such  reg- 
ulations enabling  the  Government  to  obtain  the  information  required 
under  this  law,  as  the  collector  of  internal  revenue,  with  the  approval 
of  the  secretary  of  finance,  shall  prescribe ;  and  whoever  knowingly 
undertakes  to  collect  such  payments  as  aforesaid  without  having 
obtained  a  license  therefor,  or  without  complying  with  such  regu- 
lations, shall  be   deemed  guilty  of  a  misdemeanor  and  for  each 
offense  be  fined  in  a  sum  not  exceeding  10,000  pesos,  or  imprisoned 
for  a  term  not  exceeding  one  year,  or  both,  in  the  discretion  of  the 
court. 

(e)  The  tax  herein  imposed  upon  gains,  profits,  and  incomes  not 
falling  under  the  foregoing  and  not  returned  and  paid  by  virtue  of 
the  foregoing  or  as  otherwise  provided  by  law  shall  be  assessed  by 
personal  return  under  rules  and  regulations  to  be  prescribed  by  the 
collector  of  internal  revenue  and  approved  by  the  secretary  of  finance. 
The  intent  and  purpose  of  this  law  is  that  all  gains,  profits,  and 
income  of  a  taxable  class,  as  defined  by  this  law,  shall  be  charged 
and  assessed  with  the  corresponding  tax,  normal  and  additional, 
prescribed  by  this  law,  and  said  tax  shall  be  paid  by  the  owner  of 
such  gains,  profits,  and  income,  or  the  proper  representative  having 
the  receipt,  custody,  control,  or  disposal  of  the  same.     For  the  pur- 
pose of  this  law  ownership  of  such  gains,  profits,  and  income  or 
liability  to  pay  the  tax  shall  be  determined  as  of  the  year  for  which 
a  return  is  required  to  be  rendered. 


INCOME-TAX   LAW.  97 

'he  provisions  of  this  section,  except  subdivision  (<?),  relating  to 
ie  deduction  and  payment  of  the  tax  at  the  source  of  income  shall 
only  apply  to  the  normal  tax  hereinbefore  imposed  upon  nonresident 
alien  individuals. 


CHAPTER  II. — ON  CORPORATIONS. 


EC.  10.  (As  amended  by  sec.  7,  act  No.  2926.)  (a)  There  shall  be 
levied,  assessed,  collected,  and  paid  annually  upon  the  total  net  in- 
come received  in  the  preceding  calendar  year  from  all  sources  by 
every  corporation,  joint-stock  compan^,  partnership,  joint  account 
(cuenta  en  participacion),  association,  or  insurance  company,  or- 
ganized in  the  Philippine  Islands,  no  matter  how  created  or  organ- 
ized, but  not  including  duly  registered  general  copartnerships  (com- 
panias  colectivas) ,  a  tax  of  3  per  cent  upon  such  income ;  and  a  like 
tax  shall  be  levied,  assessed,  collected,  and  paid  annually  upon  the 
total  net  income  received  in  the  preceding  calendar  year  from  all 
sources  within  the  Philippine  Islands  by  every  corporation,  joint- 
stock  company,  partnership,  joint  account  (cuenta  en  participacion), 
association,  or  insurance  company  organized,  authorized,  or  existing 
under  the  lawrs  of  any  foreign  country,  including  interest  on  bonds, 
notes,  or  other  interest-bearing  obligations  of  residents,  corporate  or 
otherwise,  and  including  the  income  derived  from  dividends  or  net 
profits  subject  to  the  tax  established  in  this  subsection. 

The  gain  derived  or  loss  sustained  from  the  sale  or  other  disposi- 
tion by  a  corporation,  joint-stock  company,  partnership,  joint  account 
(cuenta  en  participacion),  association,  or  insurance  company,  of 
property,  real,  personal,  or  mixed,  shall  be  ascertained  in  accordance 
with  subsections  (c)  and  (d)  of  section  2  of  act  No.  2833,  as  amended 
by  this  act. 

The  foregoing  tax  rate  shall  apply  to  the  net  income  received  by 
every  taxable  corporation,  joint-stock  company,  partnership,  joint 
account  (cuenta  en  participacion),  association,  or  insurance  company 
in  the  calendar  year  1920  and  in  each  year  thereafter. 

EXEMPTIONS. 

SEC.  11.  (a)  There  shall  not  be  taxed  under  this  law  any  income 
received  by  any — 

First.  Labor,  agricultural,  or  horticultural  organization. 

Second.  Mutual  savings  bank  not  having  a  capital  stock  repre- 
sented by  shares,  and  corporative  bank  without  capital  stock  or- 
ganized and  operated  for  mutual  purposes  and  without  profit. 

Third.  Fraternal  beneficiary  society,  order,  or  association,  operat- 
ing under  the  lodge  system  or  for  the  exclusive  benefit  of  the  meiiK 
52853—21 7 


98  INTERNAL   REVENUE   LAWS.  i 

bers  of  a  fraternity  itself  operating  under  the  lodge  system,  and  pro- 
viding for  the  payment  of  life,  sick,  accident,  or  other  benefits  to 
the  members  of  such  society,  order,  or  association,  or  their  de- 
pendents. 

Fourth.  Loan  and  building  association  organized  under  the  cor- 
poration law. 

Fifth.  Cemetery  company  owned  and  operated  exclusively  for  the 
benefit  of  its  members. 

Sixth.  Corporation  or  association  organized  and  operated  ex- 
clusive!}7 for  religious,  charitable,  scientific,  or  educational  purposes, 
no  part  of  the  net  income  of  which  inures  to  the  benefit  of  any  private 
stockholder  or  individual :  Provided,  however,  That  the  income  of 
whatever  kind  and  character  from  any  of  its  properties,  real  or  per- 
sonal, except  income  expressly  exempted  by  this  law,  shall  be  liable 
to  the  tax  imposed  under  this  chapter. 

Seventh.  Business  league,  chamber  of  commerce,  or  board  of  trade, 
not  organized  for  profit  and  no  part  of  the  net  income  of  which 
inures  to  the  benefit  of  any  private  stockholder  or  individual. 

Eighth.  Civic  league  or  organization  not  organized  for  profit  but 
operated  exclusively  for  the  promotion  of  social  welfare. 

Ninth.  Club  organized  and  operated  exclusively  for  pleasure, 
recreation,  and  other  nonprofitable  purposes,  no  part  of  the  net  in- 
come of  which  inures  to  the  benefit  of  any  private  stockholder  or 
member. 

Tenth.  Farmers'  or  other  mutual  typhoon  or  fire  insurance  corn- 
pa  ny,  mutual  ditch  or  irrigation  company,  mutual  or  corporative 
telephone  company,  or  like  organization  of  a  purely  local  character, 
the  income  of  which  consists  solely  of  assessments,  dues,  and  fees 
collected  from  members  for  the  sole  purpose  of  meeting  its  expenses. 

Eleventh.  Farmers',  fruit  growers',  or  like  association  organized 
and  operated  as  a  sales  agent  for  the  purpose  of  marketing  the 
products  of  its  members  and  turning  back  to  them  the  proceeds  of 
sales,  less  the  necessary  selling  expenses,  on  the  basis  of  the  quantity 
of  produce  furnished  by  them. 

Twelfth.  Corporation  or  association  organized  for  the  exclusive 
purpose  of  holding  title  to  property,  collecting  income  therefrom, 
and  turning  over  the  entire  amount  thereof,  less  expenses,  to  an 
organization  which  itself  is  exempt  from  the  tax  imposed  by  this 
law ;  or 

Thirteenth.  Joint-stock  land  bank  as  to  income  derived  from 
bonds  or  debentures  of  other  joint-stock  land  bank  or  any  land 
bank  belonging  to  such  joint-stock  land  bank. 

(b)  There  shall  not  be  taxed  under  this  law  any  income  derived 
from  any  public  utility  or  from  the  exercise  of  any  essential  govern- 


INCOME-TAX   LAW.  99 

mental  function  accruing  to  the  Government  of  the  Philippine 
Islands  or  of  any  political  subdivision  of  the  Philippine  Islands: 
Provided,  That  whenever  any  Province,  city,  or  any  political  sub- 
division of  a  Province  has,  prior  to  the  passage  of  this  law,  entered 
in  good  faith  into  a  contract  with  any  person  or  corporation,  the 
object  and  purpose  of  which  is  to  acquire,  construct,  operate,  of 
maintain  a  public  utility,  no  tax  shall  be  levied  under  the  provisions 
of  this  law  upon  the  income  derived  from  the  operation  of  such 
public  utility,  so  far  as  the  payment  thereof  will  impose  a  loss  or 
burden  upon  such  Province,  city,  or  a  political  subdivision  of  a 
Province;  but  this  provision  is  not  intended  to  confer  upon  such 
person  or  corporation  any  financial  gain  or  exemption  or  to  relieve 
such  person  or  corporation  from  the  payment  of  a  tax  as  provided 
for  in  this  law  upon  the  part  or  portion  of  the  said  income  to  which 
such  person  or  corporation  shall  be  entitled  undec  such  contract. 

DEDUCTIONS. 

SEC.  12.  (a)  In  the  case  of  a  corporation,  joint-stock  company, 
partnership,  joint  account  (cuenta  en  participacion),  association,  or 
insurance  company,  organized  in  the  Philippine  Islands,  such  net 
income  shall  be  ascertained  by  deducting  from  the  gross  amount  of 
its  income  received  within  the  year  from  all  sources : 

First.  All  the  ordinary  and  necessary  expenses  paid  within  the 
year  in  the  maintenance  and  operation  of  its  business  and  properties, 
including  rentals  or  other  payments  for  the  continued  use  or  posses- 
sion of  property  to  which  the  corporation  has  not  taken  or  is  not 
taking  title,  or  in  Avhich  it  has  no  equity. 

Second.  All  losses  actually  sustained  and  charged  off  within  the 
year  and  not  compensated  by  insurance  or  otherwise,  including  a 
reasonable  allowance  for  the  depreciation  of  property  arising  out  of 
its  use  or  employment  in  the  business  or  trade:  («)In  the  case  of  oil 
and  gas  wells  a  reasonable  allowance  for  actual  reduction  in  flow  and 
production  to  be  ascertained,  not  by  the  flush  flow,  but  by  the  settled 
production  or  regular  flow:  (b)  in  the  case  of  mines  a  reasonable 
allowance  for  depletion  thereof  *not  to  exceed  the  market  value  in 
the  mine  of  the  product  thereof  which  has  been  mined  and  sold 
during  the  year  for  which  the  return  and  computation  are  made,  such 
reasonable  allowance  to  be  made  in  the  case  of  both  (a)  and  (b) 
under  rules  and  regulations  to  be  prescribed  by  the  collector  of  in- 
ternal revenue  with  the  approval  of  the  secretary  of  finance :  Pro- 
vided, That  when  the  allowance  authorized  in  (a)  and  (b)  shall 
equal  the  capital  originally  invested,  or  in  case  of  purchase  made 
prior  to  March  1,  1913,  the  fair  market  value  as  of  that  date,  no 
further  allowance  shall  be  made;  and  (c)  in  the  case  of  insurance 


100  INTERNAL   REVENUE   LAWS. 

companies,  the  net  addition,  if  any,  required  by  law  to  be  made  within 
the  year  to  reserve  funds  and  the  sums  other  than  dividends  paid 
within  the  year  on  policy  and  annuity  contracts:  Provided,  That 
no  deduction  shall  be  allowed  for  any  amount  paid  out  for  new  build- 
ings, permanent  improvements,  or  betterments  made  to  increase  the 
value  of  am^  property  or  estate,  and  no  deduction  shall  be  made  for 
any  amount  of  expense  of  restoring  property  or  making  good  the 
exhaustion  thereof  for  which  an  allowance  is  or  has  been  made :  Pro- 
vided further.  That  mutual  fire  and  mutual  employers'  liability  and 
mutual  workmen's  compensation  and  mutual  casualty  insurance  com- 
panies requiring  their  members  to  make  premium  deposits  to  pro- 
vide for  losses  and  expenses  shall  not  return  as  income  any  portion 
of  the  premium  deposits  returned  to  their  policyholders,  but  shall 
return  as  taxable  income  all  income  received  by  them  from  all  other 
sources  plus  such  portion  of  the  premium  deposits  as  are  retained 
by  the  companies  for  purposes  other  than  the  payment  of  losses  and 
expenses  and  reinsurance  reserves:  Provided  further,  That  mutual 
marine  insurance  companies  shall  include  in  their  return  of  gross, 
income  gross  premiums  collected  and  received  by  them  less  amounts 
paid  for  reinsurance,  but  shall  be  entitled  to  include  in  deductions 
from  gross  income  amounts  repaid  to  policyholders  on  account  of 
premiums  previously  paid  by  them  and  interest  paid  upon  such 
amounts  between  the  ascertainment  thereof  and  the  payment  thereof; 
and  life  insurace  companies  shall  not  include  as  income  in  any  .year 
such  portion  of  any  actual  premium  received  from  any  individual 
policyholder  as  shall  have  been  paid  back  or  credited  to  such  in- 
dividual policyholder,  or  treated  as  an  abatement  of  premium 
of  such  individual  policyholder,  within  such  year. 

Third.  The  amount  of  interest  paid  within  the  year  on  its  indebted- 
ness, except  on  indebtedness  incurred  for  the  purchase  of  obligations 
or  securities  the  interest  upon  which  is  .exempt  from  taxation  as  in- 
come under  this  law,  to  an  amount  of  such  indebtedness  not  in  excess 
of  the  sum  of  (a)  the  entire  amount  of  the  paid-up  capital  stock  out- 
standing at  the  close  of  the  year,  or,  if  no  capital  stock,  the  entire 
amount  of  capital  employed  in  the  business  at  the  close  of  the  year, 
and  (6)  one-half  of  its  interest-bearing  indebtedness  then  outstand- 
ing: Provided,  That  for  the  purpose  of  this  law  preferred  capital 
stock  shall  not  be  considered  interest  bearing  indebtedness,  and  in- 
terest or  dividends  paid  upon  this  stock  shall  not  be  deductible  from 
gross  income:  Provided  further,  That  in  cases  wherein  shares  of 
capital  stock  are  issued  without  par  or  nominal  value,  the  amount  of 
paid-up  capital  stock  within  the  meaning  of  this  section,  as  repre- 
sented by  such  shares,  will  be  the  amount  of  cash,  or  its  equivalent, 
paid  or  transferred  to  the  corporation  as  a  consideration  for  such 
shares:  Provided  further,  That  in  the  case  of  indebtedness  wholly 


INCOME-TAX  LAW.  101 

secured  by  property  collateral,  tangible  or  intangible,  the  subject  of 
sale  or  hypothecation  in  the  ordinary  business  of  such  corporation, 
joint-stock  company,  partnership,  joint  account  (cuenta  en  partici- 
pacion),  or  association  as  a  dealer  only  in  the  property  constituting 
such  collateral,  or  in  loaning  the  funds  thereby  procured,  the  total 
interest  paid  within  the  year  on  any  such  indebtedness  may  be  de- 
ducted as  a  part  of  its  expenses  of  doing  business,  but  interest  on 
such  indebtedness  shall  only  be  deductible  on  an  amount  of  such  in- 
debtedness not  in  excess  of  the  actual  value  of  such  property  col- 
lateral :  Provided  further,  That  in  the  case  of  bonds  or  other  in- 
debtedness, which  have  been  issued  with  a  guaranty  that  the  interest 
payable  thereon  shall  be  free  from  taxation,  no  deduction  for  the 
payment  of  the  tax  herein  imposed,  or  any  other  tax  paid  pursuant 
to  such  guaranty,  shall  be  allowed ;  and  in  the  case  of  a  bank,  bank- 
ing association,  loan  or  trust  company,  interest  paid* within  the  year 
on  deposits  or  on  moneys  received  for  investment  and  secured  by 
interest-bearing  certificates  of  indebtedness  issued  by  such  bank, 
banking  association,  loan  or  trust  company  shall  be  deducted. 

Fourth.  Taxes  paid  within  the  year  imposed  by  any  foreign  Gov- 
ernment, by  the  government  of  the  Philippine  Islands,  or  by  any 
Province,  city,  municipality,  or  township,  not  including  those  as- 
sessed against  local  benefits. 

(b]  In  the  case  of  a  corporation,  joint-stock  company,  partner- 
ship, joint  account  (cuenta  en  participacion),  association,  or  insur- 
ance company,  organized,  authorized,  or  existing  under  the  laws  of 
any  foreign  country,  such  net  income  shall  be  ascertained  by  de- 
ducting from  the  gross  amount  of  its  income  received  within  the 
year  from  all  sources  within  the  Philippine  Islands — 

First.  All  the  ordinary  and  necessary  expenses  actually  paid  or 
deducted  within  the  year  out  of  earnings  in  the  maintenance  and 
operation  of  its  business  and  property  within  the  Philippine  Islands, 
including  rentals  or  other  payments  for  the  continued  use  or  posses- 
sion of  property  to  which  the  corporation  has  not  taken  or  is  not 
taking  title,  or  in  which  it  has  no  equity. 

Second.  All  losses  actually  sustained  and  charged  off  within  the 
year  in  business  or  trade  conducted  by  it  within  the  Philippine 
Islands  and  not  compensated  by  insurance  or  otherwise,  including 
a  reasonable  allowance  for  the  depreciation  of  property  arising  out 
of  its  use  or  employment  in  the  business  or  trade :  (a)  and  in  the  case 
of  oil  and  gas  wells  a  reasonable  allowance  for  actual  reduction  in 
flow  and  production  to  be  ascertained  not  by  the  flush  flow,  but  by 
the  settled  production  or  regular  flow;  (b)  in  the  case  of  mines  a 
reasonable  allowance  for  depletion  thereof  not  to  exceed  the  mar- 
ket value  in  the  mine  of  the  product  thereof  which  has  been  mined 


102  INTERNAL   REVENUE   LAWS. 

and  sold  during  the  year  for  which  the  return  and  computation  are 
made,  such  reasonable  allowance  to  be  made  in  the  case  of  both  (a) 
and  (I)  under  rules  and  regulations  to  be  prescribed  by  the  col- 
lector of  internal  revenue  with  the  approval  of  the  secretary  of 
finance :  Provided,  That  when  the  allowances  authorized  in  (a) 
and  (b)  shall  equal  the  capital  originally  invested,  or  in  case  of 
purchase  made  prior  to  March  1,  1918,  the  fair  market  value  as  of 
that  date,  no  further  allowance  shall  be  made;  and  (c)  in  the  case 
of  insurance  companies,  the  net  addition,  if  any,  required  by  law  to 
be  made  within  the  year  to  reserve  funds  and  the  sums  other  than 
dividends  paid  within  the  year  on  policy  and  annuity  contracts: 
Provided,  That  no  deduction  shall  be  allowed  for  any  amount  paid 
out  for  new  buildings,  permanent  improvements,  or  betterments, 
made  to  increase  the  value  of  any  property,  and  no  deduction  shall 
be  made  for  any  amount  of  expense  of  restoring  property  or  making 
good  the  exhaustion  thereof  for  which  an  allowance  is  or  has  been 
made :  Provided  further.  That  mutual  fire  and  mutual  employers' 
liability  and  mutual  workmen's  compensation  and  mutual  casualty 
insurance  companies  requiring  their  members  to  make  premium  de- 
posits to  provide  for  losses  and  expenses  shall  not  return  as  income 
any  portion  of  the  permium  deposits  returned  to  their  policyholders, 
but  shall  return  as  taxable  income  all  income  received  by  them  from 
all  other  sources  plus  such  portion  of  the  premium  deposits  as  are 
retained  by  the  companies  for  purposes  other  than  the  payment  of 
losses  and  expenses  and  reinsurance  reserves :  Provided  further,  That 
mutual  marine  insurance  companies  shall  include  in  their  return  of 
gross  income  gross  premiums  collected  and  received  by  them  less 
amounts  paid  for  reinsurance,  but  shall  be  entitled  to  include  in  de- 
ductions from  gross  income  amounts  repaid  to  policyholders  on 
account  of  premiums  previously  paid  by  them,  and  interest  paid 
upon  such  amounts  between  the  ascertainment  thereof  and  the 
payment  thereof,  and  life  insurance  companies  shall  not  include  as 
income  in  any  year  such  portion  of  any  actual  premium  received 
from  any  individual  policyholder  as  shall  have  been  paid  back  or 
credited  to  such  individual  policyholder,  or  treated  as  an  abatement 
of  premium  of  such  individual  policyholder  within  such  year. 

Third.  The  amount  of  interest  paid  within  the  year  on  its  in- 
debtedness, except  on  indebtedness  incurred  for  the  purchase  of 
obligations  or  securities  the  interest  upon  which  is  exempt  from 
taxation  as  income  under  this  law,  to  an  amount  of  such  indebtedness 
not  in  excess  of  the  proportion  of  the  sum  of  (a)  the  entire  amount 
of  the  paid-up  capital  stock  outstanding  at  the  close  of  the  year,  or, 
if  no  capital  stock,  the  entire  amount  of  the  capital  employed  in  the 
business  at  the  close  of  the  year;  and  (b)  one-half  of  its  interest- 


AS 
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th 

th 

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$ 


INCOME-TAX   LAW.  103 

bearing  indebtedness  then  outstanding,  which  the  gross  amount  of  its 
income  for  the  year  from  business  transacted  and  capital  invested 
within  the  Philippine  Islands  bears  to  the  gross  amount  of  its  in- 
come derived  from  all  sources  within  and  without  the  Philippine 
Islands:  Provided,  That  in  the  case  of  bonds  or  other  indebtedness 
which  have  been  issued  with  a  guaranty  that  the  interest  payable 

ereon  shall  be  free  from  taxation,  no  deduction  for  the  payment  of 

e  tax  herein  imposed  or  any  other  tax  paid  pursuant  to  such 
guaranty  shall  be  allowed;  and  in  case  of  a  bank,  banking  associa- 
ion,  loan  or  trust  company,  or  branch  thereof,  interest  paid  within 

e  year  on  deposits  by  or  on  moneys  received  for  investment  from 
either  citizens  or  residents  of  the  Philippine  Islands  and  secured  by 
interest-bearing  certificates  of  indebtedness  issued  by  such  bank, 
banking  association,  loan  or  trust  company,  or  bratich  thereof,  shall 
be  deducted. 

Fourth.  Taxes  paid  within  the  year  in  the  Philippine  Islands, 
imposed  by  the  Government  of  the  United  States,  by  the  government 
of  the  Philippine  Islands,  or  by  any  Province,  city,  municipality,  or 
township,  not  including  those  assessed  against  local  benefits. 

(<?)  In  the  case  of  assessment  insurance  companies,  whether  domes- 
tic or  foreign,  the  actual  deposit  of  sums  with  the  officers  of  the 
government  of  the  Philippine  Islands,  pursuant  to  law,  as  additions 
to  guarantee  or  reserve  funds,  shall  be  treated  as  being  payments 
required  by  law  to  reserve  funds. 

RETURNS. 

SEC.  13.  (As  amended  by  sec.  8,  act  No.  2926.)  (a)  The  tax  shall  be 
computed  upon  the  net  income,  ascertained  in  accordance  with  the 
foregoing  provisions,  received  within  each  preceding  calendar  year 
ending  December  31 :  Provided,  Thatv  any  corporation,  joint-stock 
company,  partnership,  joint  account  (cuenta  en  participacion),  asso- 
ciation, or  insurance  company,  subject  to  this  tax.  may  designate  the 
last  day  of  any  month  in  the  year  as  the  day  of  the  closing  of  its 
fiscal  year,  and  shall  be  entitled  to  have  the  tax  payable  by  it  com- 
puted upon  the  basis  of  the  net  income  ascertained  as  herein  pro- 
vided for  the  year  ending  on  the  day  so  designated  in  the  year  pre- 
ceding the  date  of  assessment  instead  of  upon  the  basis  of  the  net 
income  for  the  calendar  }^ear  preceding  the  date  of  assessment ;  and 
it  shall  give  notice  of  the  day  it  has  thus  designated  as  the  closing 
of  its  fiscal  year  to  the  collector  of  internal  revenue  at  any  time  not 
less  than  30  days  prior  to  the  1st  day  of  March  of  the  year  in  which 
its  return  would  be  filed  if  made  upon  the  basis  of  the  calendar  year. 

(b)  Every  corporation,  joint-stock  company,  partnership,  joint 
account  (cuenta  en  participacion).  association,  or  insurance  com- 


104  INTERNAL   REVENUE   LAWS. 

pany,  subject  to  the  tax  herein  imposed,  shall,  on  or  before  the  1st 
day  of  March,  1920,  and  the  1st  day  of  March  in  each  year  thereafter, 
or,  if  it  has  designated  a  fiscal  year,  then  within  60  days  after  the 
close  of  such  fiscal  }^ear  ending  prior  to  December  31,  1920,  and  the 
close  of  each  such  fiscal  year  thereafter,  render  a  true  and  accurate 
return  of  its  annual  net  income  in  the  manner  and  form  to  be  pre- 
scribed by  the  collector  of  internal  revenue  with  the  approval  of 
the  secretary  of  finance,  and  containing  such  facts,  data,  and  infor- 
mation as  are  appropriate  and  in  the  opinion  of  the  collector  neces- 
sary to  determine  the  correctness  of  the  net  income  returned  and  to 
carry  out  the  provisions  of  this  law.  The  return  shall  be  sworn  to 
by  the  president,  vice  president,  or  other  principal  officer,  and  by 
the  treasurer  or  assistant  treasurer.  The  return  shall  be  made  to 
the  collector  or  to  the  treasurer  of  the  Province  in  which  is  located 
the  principal  office  of  the  corporation,  joint-stock  company,  partner- 
ship, joint  account  (cuenta  en  participacion),  or  association,  where 
are  kept  its  books  of  account  and  other  data  from  which  the  return 
is  prepared,  or  in  the  case  of  a  foreign  corporation,  joint-stock 
company,  partnership,  joint  account  (cuenta  en  participacion),  or 
association,  to  the  collector  or  to  the  treasurer  of  the  Province  in 
which  is  located  its  principal  place  of  business  in  the  Philippine 
Islands,  or,  if  it  have  no  office  of  any  kind  or  agency  in  the  Philip- 
pine Islands,  then  to  the  collector  of  internal  revenue.  All  such 
returns  shall  as  received  be  transmitted  forthwith  by  the  officer  re- 
ceiving them  to  the  collector  of  internal  revenue. 

(c)  In  cases  wherein  receivers,  trustees  in  bankruptcy,  or  assignees 
are  operating  the  property  or  business  of  corporations,  joint-stock 
companies,  partnerships,  joint  accounts  (cuentas  en  participacion), 
associations,  or  insurance  companies,  subject  to  tax  imposed  by  this 
law,  such  receivers,  trustees,  or  assignees  shall  make  returns  of  net 
income  as  and  for  such  corporations,  joint-stock  companies,  partner- 
ships, joint  accounts  (cuentas  en  participacion),  associations,  and  in- 
surance companies,  in  the  same  manner  and  form  as  such  organiza- 
tions are  hereinbefore  required  to  make  returns ;  and  any  tax  due  on 
the  income  as  returned  by  receivers,  trustees,  or  assignees  shall  be 
assessed  and  collected  in  the  same  manner  as  if  assessed  directly 
against  the  organizations  of  whose  businesses  or  properties  they  have 
custody  and  control. 

(d)  A  corporation,  joint-stock  company,  partnership,  joint  account 
(cuenta  en  participacion),  association,  or  insurance  company,  keep- 
ing account  upon  any  basis  other  than  that  of  actual  receipts  and 
disbursements,  unless  such  other  basis  does  not  clearly  reflect  its  in- 
come, may,  subject  to  regulations  made  by  the  collector  of  internal 
revenue  with  the  approval  of  the  secretary  of  finance,  make  its  return 


INCOME-TAX   LAW.  105 

m  the  basis  upon  which  its  accounts  are  kept,  in  which  case  the  tax 
tall  be  computed  upon  its  income  as  so  returned. 

(e)  All  the  provisions  of  this  law  relating  to  the  tax  required  to 
be  deducted  and  withheld  and  paid  to  the  internal-revenue  officer 
authorized  to  receive  the  same  from  the  income  of  nonresident  alien 
individuals  from  sources  within  the  Philippine  Islands  shall  be  made 
applicable  to  the  tax  imposed  by  subdivision  (a)  of  section  10  upon 
the  incomes  described  in  subsection  (6)  of  section  9,  obtained  by  non- 
resident alien  firms,  copartnerships,  companies,  corporations,  joint- 
stock  companies,  partnerships,  and  insurance  companies,  not  engaged 
in  business  or  trade  within  the  Philippine  Islands  and  not  having 
any  office  or  place  of  business  therein. 

(/)  Likewise,  all  the  provisions  of  this  law  relating  to  the  tax  re- 
quired to  be  deducted  and  withheld  and  paid  to  the  officer  of  the  gov- 
ernment of  the  Philippine  Islands  authorized  to  receive  the  same 
from  the  income  of  nonresident  alien  individuals  from  sources  within 
the  Philippine  Islands  shall  be  made  applicable  to  income  derived 
from  dividends  upon  the  capital  stock  or  from  the  net  earnings  of 
domestic  or  other  resident  corporations,  joint-stock  companies,  part- 
nerships, joint  accounts  (cuentas  en  participacion),  associations,  and 
insurance  companies  by  nonresident  alien  firms,  corporations,  joint- 
stock  companies,  partnerships,  joint  accounts  (cuentas  en  participa- 
cion), associations,  and  insurance  companies,  not  engaged  in  business 
or  trade  within  the  Philippine  Islands  and  not  having  any  office  or 
place  of  business  therein. 

ASSESSMENT. 

SEC.  14.  (a)  All  assessments  shall  be  made  by  the  collector  of  in- 
ternal revenue,  and  the  several  corporations,  joint-stock  companies, 
partnerships,  joint  accounts  (cuentas  en  participacion),  associations, 
and  insurance  companies  shall  be  notified  of  the  amount  for  which 
they  are  respectively  liable  on  or  before  the  1st  day  of  June  of  each 
year,  and  said  assessment  shall  be  paid  on  or  before  the  loth  day  of 
June:  Provided,  That  every  corporation,  joint-stock  company,  part- 
nership, joint  account  (cuenta  en  participacion),  association,  and  in- 
surance company,  computing  taxes  upon  the  income  of  the  fiscal  year 
which  it  may  designate  in  the  manner  hereinbefore  provided,  shall 
pay  the  taxes  due  under  its  assessment  within  105  days  after  the 
date  upon  which  it  is  required  to  file  its  list  or  return  of  income  for 
assessment ;  except  in  cases  of  refusal  or  neglect  to  make  such  return, 
and  in  cases  of  erroneous,  false,  or  fraudulent  returns,  in  which 
cases  the  collector  of  internal  revenue  shall,  upon  the  discovery 
thereof,  at  any  time  within  three  years  after  said  return  is  made  or 
due,  make  a  return  upon  information  obtained  as  provided  for  in 
this  law  or  by  existing  law,  or  require  the  return  made  to  be  cor- 


106  INTERNAL   EE VENUE   LAWS. 

reeled  and  the  assessment  made  by  the  collector  of  internal  revenue 
thereon  shall  be  paid  by  such  corporation,  joint-stock  company,  part- 
nership, joint  account  (cuenta  en  participacion),  association,  or  in- 
surance company  immediately  upon  notification  of  the  amount  of 
such  assessment ;  and  to  the  tax  due  and  unpaid  after  the  loth  day 
of  June  of  any  year,  or  after  105  days  from  the  date  on  which  the 
return  of  income  is  required  to  be  made  by  the  taxpayer,  and  after 
10  days'  notice  and  demand  thereof  by  the  collector,  there  shall  be 
added  5  per  cent  on  the  amount  and  interest  at  the  rate  of  1  per 
cent  per  month  upon  the  said  tax  from  the  time  the  same  becomes 
due :  Pro  vided,  That  upon  the  examination  of  any  return  of  income 
made  pursuant  to  this  law,  if  it  shall  appear  that  amounts  of  tax 
have  been  paid  in  excess  of  those  properly  due,  the  taxpayers  shall 
be  permitted  to  present  a  claim  for  refund  thereof. 

(b)  After  the  assessment  shall  have  been  made,  as  provided  in 
this  law,  the  returns,  together  with  any  corrections  thereof  which 
may  have  been  made  by  the  collector,  shall  be  filed  in  the  office  of 
the  collector  of  internal  revenue  and  shall  constitute  public  records 
and  be  open  to  inspection  as  such  upon 'the  order  of  the  governor 
general  under  rules  and  regulations  to  be  prescribed  by  the  secretary 
of  finance. 

(c)  If  any  of  the  corporations,  joint-stock  companies,  partner- 
ships, joint  accounts  (cuentas  en  participacion),  associations,  or  in- 
surance companies  aforesaid  shall  refuse  or  neglect  to  make  a  return 
at  the  time  or  times  hereinbefore  specified  in  each  year,  or  shall 
render  a  false  or  fraudulent  return,  such  corporation,  joint-stock 
company,    partnership,    joint    account     (cuenta    en    participacion), 
association,  or  insurance  company  shall  be  liable  to  a  penalty  of  not 
exceeding  1*20,000 :  Provided,  That  the  collector  of  internal  revenue 
shall  have  authority  to   grant  a   reasonable  extension  of  time  in 
meritorious  cases,  as  he  may  deem  proper. 

(d)  When  a  second  assessment  is  made  in  case  of  any  list,  state- 
ment, or  return,  which  in  the  opinion  of  the  collector  was  false  or 
fraudulent,  or  contained  any  understatement  or  undervaluation,  no 
tax  collected  under  such  assessment  shall  be  recovered  by  any  suit 
unless  it  is  proved  that  the  said  list,  statement,  or  return  was  not 
false  nor  fraudulent  and  did  not  contain  any  understatement  or 
undervaluation;  but  this  provision  shall  not  apply  to  statements  or 
returns  made  or  to  be  made  in  good  faith  regarding  annual  depre- 
ciation of  oil  or  gas  wells  and  mines. 

CHAPTER  III. — GENERAL  ADMINISTRATIVE  PROVISIONS. 

SEC.  15.  The  collector  of  internal  revenue  shall  assess  all  income 
taxes.  In  case  of  any  failure  to  make  and  file  a  return  or  list  within 
the  time  prescribed  by  law  or  by  the  collector  or  other  internal-rev- 


INCOME-TAX   LAW.  107 

?nue  officer,  the  collector  of  internal  revenue  shall  add  to  the  tax 
50  per  cent  of  its  amount,  except  that,  when  a  return  is  volun- 
tarily and  without  notice  from  the  collector  or  other  officer  filed 
after  such  time,  and  it  is  shown  that  the  failure  to  file  it  wasudue 
to  a  reasonable  cause  and  not  to  willful  neglect,  no  such  addition 
shall  be  made  to  the  tax.  In  case  a  false  or  fraudulent  return  or  list 
is  willfully  made,  the  collector  of  internal  revenue  shall  add  to  the 
tax  100  per  cent  of  its  amount.  The  amount  so  added  to  any  tax 
shall  be  collected  at  the  same  time  and  in  the  same  manner  and  as 
part  of  the  tax  unless  the  tax  has  been  paid  before  the  discovery  of 
the  neglect,  falsity,  or  fraud,  in  which  case  the  amount  so  added  shall 
be  collected  in  the  same  manner  as  the  tax. 

SEC.  16.  It  shall  be  the  duty  of  the  collector  of  internal  revenue 
and  every  other  internal-revenue  officer  to  whom  any  payment  of 
any  taxes  is  made  under  the  provisions  of  this  law  to  give  to  the 
person  making  such  payment  a  full  written  or  printed  receipt,  ex- 
pressing the  amount  paid  and  the  particular  account  for  which  such 
payment  was  made;  and  whenever  such  payment  is  made,  such  col- 
lector or  other  officer  shall,  if  required,  give  a  separate  receipt  for 
each  tax  paid  by  any  debtor,  on  account  of  payments  made  to  or  to 
be  made  by  him  to  separate  creditors  in  such  form  that  such  debtor 
can  conveniently  produce  the  same  separately  to  his  several  creditors 
in  satisfaction  of  their  respective  demands  to  the  amounts  specified 
in  such  receipts ;  and  such  receipts  shall  be  sufficient  evidence  in 
favor  of  such  debtor  to  justify  him  in  withholding  the  amount  herein 
expressed  from  his  nex^  payment  to  his  creditor;  but  such  creditor 
may,  upon  giving  to  his  debtor  a  full  written  receipt  acknowledging 
the  payment  to  him  of  whatever  sum  may  be  actually  paid,  and  ac- 
cepting the  amount  of  tax  paid  as  aforesaid,  specifying  the  same, 
as  a  further  satisfaction  of  the  debt  to  that  amount,  require  the 
surrender  to  him  of  such  collector's  or  other  officer's  receipt. 

SEC.  17.  Anyone  liable  to  pay  the  tax,  to  make  a  return,  or  to  sup- 
ply information  required  under  this  law,  who  refuses  or  neglects  to 
pay  such  tax,  to  make  such  return  or  to  supply  such  information  at 
the  time  or  times  herein  specified  in  each  year,  shall  be  liable,  except 
as  otherwise  specially  provided  in  this  law,  to  a  penalty  of  not  less 
than  40  pesos  nor  more  than  2,000  pesos.  Any  individual  or  any 
officer  of  any  corporation,  partnership,  joint  account  (cuenta  en 
participacion) ,  association,  insurance  company,  or  general  copartner- 
ship (compania  colectiva),  required  by  law  to  make,  render,  sign, 
or  verify  any  return  or  to  supply  any  information,  who  makes  any 
false  or  fraudulent  return  or  statement  with  intent  to  defeat  or  evade 
the  assessment  required  by  this  law  to  be  made,  shall  be  guilty  of  a 
misdemeanor,  and  shall  be  fined  not  exceeding  4,000  pesos  or  be  im- 
prisoned not  exceeding  one  year,  or  both,  in  the  discretion  of  the 


1Q8  INTERNAL   REVENUE   LAWS. 

court,  with  the  costs  of  prosecution:  Provided,  That  where  any  tax 
heretofore  due  and  payable  has  been  duly  paid  by  the  taxpayer,  it 
shall  not  be  recollected  from  any  withholding  agent  required  to 
retain  it  at  its  source,  nor  shall  any  penalty  be  imposed  or  collected 
in  such  cases  from  the  taxpayer,  or  such  withholding  agent  whose 
duty  it  was  to  retain  it,  for  failure  to  return  or  pay  the  same,  unless 
such  failure  was  fraudulent  and  for  the  purpose  of  evading  payment. 

SEC.  18.  The  collector  or  other  internal-revenue  officer  shall  require 
every  return  to  be  verified  by  the  oath  of  the  party  rendering  it.  If 
the  collector  or  other  officer  has  reason  to  believe  that  the  amount  of 
any  income  returned  is  understated,  he  shall  give  due  notice  to  the 
person  making  the  return  to  show  cause  why  the  amount  of  the 
return  should  not  be  increased,  and  upon  proof  of  the  amount  under- 
stated may  increase  the  same  accordingly.  Such  person  may  furnish 
sworn  testimony  to  prove  any  relevant  facts,  and,  if  dissatisfied  with 
the  decision  of  an  internal-revenue  officer,  may  appeal  to  the  col- 
lector of  internal  revenue  for  his  decision  under  such  rules  of  pro- 
cedure as  may  be  prescribed  by  regulations. 

SEC.  19.  All  administrative,  special,  and  general  provisions  of 
law,  including  the  laws  in  relation  to  the  assessment,  remission, 
collection,  and  refund  of  internal-revenue  taxes  not  heretofore  spe- 
cifically repealed  and  not  inconsistent  with  the  provisions  of  this 
law,  are  hereby  extended  and  made  applicable  to  all  of  the  pro- 
visions of  this  law  and  to  the  tax  herein  imposed. 

SEC.  20.  Section  II  of  the  act  of  the  United  'States  Congress  ap- 
proved October  3,  1913,  entitled  "An  act  to  reduce  tariff  duties  and 
to  provide  revenue  for  the  Government,  and  for  other  purposes  " ; 
Title  I  of  the  act  of  the  United  States  Congress  approved  September 
8,  1916,  entitled  "An  act  to  increase  the  revenue,  and  for  other  pur- 
poses " ;  and  Title  XII  of  the  act  of  the  United  States  Congress  ap- 
proved October  3, 1917,  entitled  "An  act  to  provide  revenue  to  defray 
war  expenses,  and  for  other  purposes,"  are  hereby  superseded,  except 
as  herein  otherwise  provided,  and  except  that  they  shall  remain 
in  force  for  the  assessment  and  collection  of  all  taxes  which  have 
accrued  thereunder,  and  for  the  imposition  and  collection  of  all 
penalties  or  forfeitures  which  have  accrued  or  may  accrue  in  relation 
to  any  of  such  taxes. 

SEC.  21.  Every  corporation,  joint-stock  company,  partnership," 
joint  account  (cuenta  en  participacion),  association,  or  insurance 
company  subject  to  the  tax  herein  imposed,  when  required  by  the 
collector  of  internal  revenue,  shall  render  a  correct  return,  duly 
verified  under  oath,  of  its  payments  of  profits  or  dividends,  whether 
made  in  cash  or  its  equivalent  or  in  stock,  including  the  names  and 
addresses  of  members  or  stockholders,  the  paid-up  capital  or  the 


INCOME-TAX  LAW.  109 

number  of  shares  owned  by  each,  and  the  tax  years  and  gains  or 
earnings  from  which  such  dividends  or  profits  were  derived,  in  such 
form  as  may  be  prescribed  by  the  collector  of  internal  revenue  with 
the  approval  of  the  secretary  of  finance. 

SEC.  22.  Every  person,  corporation,  partnership,  joint  account 
cuenta  en  participacion),  general  copartnership  (compania  colec- 
iva),  or  association,  doing  business  as  a  broker  in  any  exchange  or 

ard  of  trade  or  other  similar  place  of  business  shall,  when'  re- 
quired by  the  collector  of  internal  revenue,  render  a  correct  return 
duly  verified  under  oath,  under  such  regulations  as  the  collector  of 
internal  revenue,  with  the  approval  of  the  secretary  of  finance,  may 
prescribe,  showing  the  names  of  customers  for  whom  such  person, 
corporation,  partnership,  joint  account  (cuenta  en  participacion), 
general  copartnership  (compania  colectiva),  or  association  has  trans- 
acted any  business,  with  such  details  as  to  the  profits,  losses,  or  other 
information  which  the  collector  may  require  as  to  each  of  such 
customers  as  will  enable  the  collector  of  internal  revenue  to  deter- 
mine whether  all  income  tax  due  on  profits  or  gains  of  such  cus- 
tomers has  been  paid. 

SEC.  23.  (As  amended  by  sec.  9,  act  No.  2926.)  All  persons,  corpora- 
tions, partnerships,  joint  accounts  (cuentas  en  participacion),  gen- 
eral copartnerships  (companias  colectivas),  associations,  and  insur- 
ance companies,  in  whatever  capacity  acting,  including  lessees  or 
mortgagors  of  real  or  personal  property,  trustees  acting  in  any  trust 
rapacity,  executors,  administrators,  receivers,  conservators,  and  em- 
ployers, making  payment  to  another  person,  corporation,  partner- 
ship, joint  account  (cuenta  en  participacion),  general  copartnership 
(compania  colectiva),  association,  or  insurance  company  of  inter- 
ests, rents,  salaries,  wages,  premiums,  annuities,  compensation,  re- 
muneration, emoluments,  or  other  fixed  or  determinable  gains,  profits, 
and  income,  other  than  payments  described  in  sections  21  and  22, 
of  3,000  pesos  or  more  in  any  taxable  year,  or,  in  the  case  of  such 
payments  made  by  the  Government  of  the  Philippine  Islands,  the 
officers  or  employees  of  the  Government  having  informations  as  to 
such  payments  and  required  to  make  returns  in  regard  thereto  are 
hereby  authorized  and  required  to  render  a  true  and  accurate  return 
to  the  collector  of  internal  revenue,  under  such  rules  and  regulations 
and  in  such  form  and  manner  as  may  be  prescribed  by  him  with 
the  approval  of  the  secretary  of  finance,  setting  forth  the  amount 
of  such  gains,  profits,  and  income,  and  the  name  and  address  of  the 
recipient  of  such  payment:  Provided,  That  such  returns  shall  be 
required,  regardless  of  amounts  in  the  case  of  payments  of  interest 
upon  bonds  and  mortgages  or  deeds  of  trust  or  other  similar  obliga- 
tions of  corporations,  joint-stock  companies,  partnerships,  joint  ac- 


J.J.U  IJNTUKJNAij    KUV.LJNUK    JLAWS. 

counts  (cuentas  en  participacion),  associations,  and  insurance  com- 
panies, and  in  the  case  of  collections  of  items,  not  payable  in  the 
Philippine  Islands,  of  interest  upon  the  bonds  of  foreign  countries 
and  interest  from  the  bonds  and  dividends  from  the  stock  of  foreign 
corporations  by  persons,  corporations,  partnerships,  joint  accounts 
(cuentas  en  participacion),  general  copartnerships  (companias  colec- 
tivas),  or  associations,  undertaking  as  a  matter  of  business  or  for 
profit  or  otherwise  the  collection  of  foreign  payments  of  such  interest 
or  dividends  by  means  of  coupons  or  bills  of  exchange. 

The  provisions  of  this  section  shall  apply  to  the  calendar  }-ear 
1920  and  each  calendar  year  thereafter. 

SEC.  24.  Nothing  in  this  law  shall  be  construed  as  taxing  the  in- 
come of  foreign  Governments  received  from  their  investments  in  the 
Philippine  Islands  in  stocks,  bonds,  or  other  domestic  securities,  or 
from  interest  on  their  deposits  in  banks  in  the  Philippine  Islands. 

SEC.  25.  (As  amended  by  sec.  10,  act  No.  2926.)  (a]  The  term  "  divi- 
dends "  as  used  in  this  law  shall  be  held  to  mean  any  distribution  made 
or  ordered  to  be  made  by  a  corporation,  joint-stock  company,  asso- 
ciation, or  insurance  company,  out  of  its  earnings  or  profits  accrued 
since  March  1,  1913,  and  payable  to  its  shareholders,  whether  in  cash 
or  in  stock  of  the  corporation,  joint-stock  company,  association,  or 
insurance  company.  Stock  dividend  shall  be  considered  income  to 
the  amount  of  the  earnings  or  profits  distributed. 

(b)  Any  distribution  made  to  the  shareholders  or  members  of  a 
corporation,  joint-stock  company,  partnership,  joint  account  (cuenta 
en  participacion),  association,  or  insurance  company  in  the  year 
1920,  or  subsequent  tax  years,  shall  be  deemed  to  have  been  made 
from  the  most  recently  accumulated  profits  or  surplus,  and  shall  con- 
stitute a  part  of  the  annual  income  of  the  distributee  for  the  year  in 
which  received,  and  shall  be  taxed  to  the  distributee  at  the  rates  pre- 
scribed by  law  for  the  years  in  which  such  profits  or  surplus  were 
received:  PrornJed,  That  in  the  case  of  stock  dividends  the  tax 
thereon  shall  be  collected  in  accordance  with  the  rates  prescribed  by 
law  for  the  years  in  which  the  earnings  or  profits  distributed  in  the 
shape  of  such  dividends  were  accumulated:  Provided  further.  That 
nothing  herein  shall  be  construed  as  taxing  any  earnings  or  profits 
accrued  prior  to  March  1,  1913,  but  such  earnings  or  profits  may  be 
distributed  in  stock  dividends  or  otherwise,  exempt  from  the  tax, 
after  the  distribution  of  earnings  and  profits  accrued  since  March  1, 
1913,  has  been  made. 

SKC.  26.  Premiums  paid  on  life  insurance  policies  covering  the  lives 
of  officers,  employees,  or  those  financially  interested  in  any  trade  or 
business  conducted  by  an  individual,  partnership,  joint  account 
(cuenta  en  participacion),  general  copartnership  (compania  co- 


INCOME-TAX   LAW.  HI 


lectiva),  corporation,  joint-stock  company,  association,  or  insurance 
company,  shall  not  be  deducted  in  computing  the  net  income  of  these. 

SEC.  27.  Section  489  of  act  No.  2711  is  hereby  amended  to  read  as 
follows : 

(See  p.  81.) 

SEC.  28.  Section  1424  of  act  No.  2711  is  hereby  amended  by  adding 
a  new  subsection  (ni),  which  shall  read  as  follows: 

(See  p.  8.) 

SEC.  29.  Section  1588  of  act  No.  2711  is  hereby  amended  by  adding 
thereto  the  following  paragraph : 

(Seep.  59.) 

SEC.  30.  Section  2716  of  act  No.  2711  is  hereby  amended  to  read 
as  follows: 

(Seep.  68.) 

SEC.  31.  Section  2731  of  act  No.  2711  is  hereby  .amended  to  read 
as  follows : 

(See  p.  73.) 


CHAPTER  IV. — GENERAL  PROVISIONS. 


SEC.  32.  If  any  clause,  sentence,  paragraph,  or  part  of  this  act  shall 
be  adjudged  by  any  court  of  competent  jurisdiction  to  be  invalid, 
such  judgment  shall  not  affect,  impair,  or  invalidate  the  remainder 
of  said  act,  but  shall  be  confined  in  its  operation  to  the  clause,  sen- 
tence, paragraph,  or  part  thereof  directly  involved  in  the  contro- 
versy. 

SEC.  33.  For  the  purposes  of  this  law  the  terms  "  alien "  and 
"  foreign  Government "  shall  be  deemed  to  include  the  citizens  and 
Government  of  the  United  States  of  America,  including  the  political 
subdivisions  thereof :  Provided,  however,  That  citizens  of  the  United 
States  residing  in  the  Philippine  Islands  shall  not  be  subject  to 
taxation  under  this  law  as  to  their  incomes  derived  from  sources 
within  the  United  States,  if  it  is  shown  that  the  tax  thereon  has 
been  paid  in  accordance  with  the  laws  of  that  country. 

SEC.  34.  This  act  shall  take  effect  on  January  1,  1920. 

Approved  March  7,  1919. 


TOBACCO  INSPECTION  LAW. 


• 


[Third  Philippine  Legislature,  fourth  session.     A.  B.  No.  158S.  | 
[No.  2613.] 

n  act  to  improve  the  methods  of  production  and  the  quality  of  tobacco  in  the 
Philippines  and  to  develop  the  export  trade  therein. 


By  authority  of  the  United  States,  ~be  it  enacted  ~by  the  PhiUppme 
Legislature,  that: 

SECTION  1.  It  is  hereby  provided  that  the  Bureau  of  Agriculture, 
through  its  agents  or  inspectors  established  in  the  tobacco  provinces, 
shall  periodically  order,  whenever  it  shall  become  necessary,  the  pur- 
chase of  seeds  of  well-developed  tobacco  plants.  The  seeds  pur- 
chased as  prescribed  in  this  act  shall  be  passed  through  a  cleaning 
machine,  with  which  each  provincial  agricultural  station  shall  be 
provided,  and,  when  cleaned,  shall  be  distributed  gratuitously  by  the 
inspecting  agents  of  the  Bureau  of  Agriculture  proportionately 
among  the  tobacco  planters. 

SEC.  2.  It  shall  be  unlawful  for  any  tobacco  planter  or  other  per- 
son who  has  in  his  possession  uncured  or  incompletely  cured  leaf 
tobacco,  to  cure,  dry,  ferment, -or  treat  same  in  any  other  manner, 
otherwise  than  in  a  building  or  curing  shed  constructed  in  accordance 
with  the  specifications  of  the  Bureau  of  Agriculture.  This  provision 
shall  not  apply  to  those  who  produce  tobacco  on  a  small  scale  ex- 
clusively for  their  own  consumption.  During  a  period  of  three  years 
after  the  passage  of  this  act,  the  director  of  forestry  shall  issue  to 
any  producer  of  tobacco  a  gratuitous  license  to  cut  timber  of  the 
first  group  for  the  construction  of  warehouses  exclusively  for  the 
curing  of  tobacco. 

SEC.  3.  The  director  of  agriculture  is  hereby  authorize^  to  appoint 
in  any  tobacco  province  the  necessary  inspectors  to  carry  out  the 
purposes  of  this  act.  Said  inspectors  shall  preferably  be  residents 
of  the  province  where  they  are  to  serve,  and  persons  of  great  in- 
fluence and  proven  knowledge  in  matters  relating  to  the  planting  and 
production  of  tobacco  shall  be  selected.  Their  salary  shall  be  fixed 
in  their  appointments,  but  shall  not  exceed  1,200  pesos  per  annum 
each  and  they  shall  not  be  subject  to  the  civil-service  rules.  Said 
tobacco  inspectors  shall  receive  a  per  diem  not  greater  than  2  pesos 
when  they  are  performing  inspections  outside  of  the  municipality 
of  their  official  station,  together  with  actual  and  necessary  traveling 
expenses. 

SEC.  4.  For  the  purpose  of  stimulating  the*  production  of  the  best 
tobacco  among  tobacco  planters  the  director  of  agriculture  may 
classify  planters  as  first-class  and  second-class  planters,  and  may 
52853—21 8  113 


114  INTERNAL   REVENUE   LAWS. 

grant  diplomas  to  planters  or  producers  for  excellence  in  the  pro- 
duction of  tobacco. 

SEC.  5.  The  collector  of  internal  revenue  is  empowered  by  this  act 
to  announce  contests  for  the  purpose  of  discovering  some  remedy 
against  tobacco  pests  and  may  grant  from  the  fund  known  as  the 
tobacco  inspection  fund  the  amount  which  he  considers  necessary  to 
reward  the  discoverer  of  a  remedy  which  in  his  opinion  proves  to  be 
the  most  efficient  of  those  offered  in  the  contest. 

SEC.  6.  The  collector  of  internal  revenue  shall  have  the  power  and 
it  shall  be  his  duty — 

(a)  To  establish  general  and  local  rules  respecting  the  classifica- 
tion, marking,  and  packing  of  tobacco  for  domestic  sale  or  for  ex- 
portation to  the  United  States  so  far  as  may  be  necessary  to  secure 
leaf  tobacco  of  good  quality  and  to  secure  its  handling  under  sani- 
tary conditions,  and  to  the  end  that  leaf  tobacco  be  not  mixed,  packed, 
and  marked  as  of  the  same  quality  when  it  is  not  of  the  same  class 
and  origin. 

(Z>)  To  establish  from  time  to  time  adequate  rules  defining  the 
standard  and  the  type  of  leaf  and  manufactured  tobacco  which  may 
be  exported  to  the  United  States,  as  well  also  as  the  manner  in  which 
standard  tobacco  for  export,  whether  it  be  leaf  tobacco  or  manu- 
factured tobacco,  shall  be  packed.  Before  establishing  the  rules 
above  specified,  the  collector  of  internal  revenue  shall  give  due 
notice  of  the  proposed  rules  or  amendments  to  those  interested  and 
shall  give  them  an  opportunity  to  present  their  objections  to  such 
rules  or  amendments. 

(c)  To  require,  whenever  it  shall  be  deemed  expedient,  the  inspec- 
tion  of  and  affixture  of  inspection  labels  to  tobacco  removed  from  the 
Province  of  its  origin  to  another  or  other  Provinces  before  such 
removal. 

SEC.  7.  No  leaf  tobacco  or  manufactured  tobacco  shall  be  exported 
from  the  Philippine  Islands  to  the  United  States  until  it  shall  have 
been  inspected  by  the  collector  of  internal  revenue  or  his  duly  au- 
thorized representative  and  found  to  be  standard  for  export.  Col- 
lectors of  customs  shall  not  permit  the  exportation  of  tobacco  from 
the  Philippine  Islands  unless  the  shipment  be  in  conformity  with 
the  requirements  set  forth  in  this  act.  The  prohibition  contained  in 
this  section  shall  not  apply  to  waste  and  refuse  of  tobacco  accumu- 
lated in  the  manufacturing  process  when  it  is  invoiced  and  marked 
as  such  waste  and  refuse. 

SEC.  8.  For  inspections  made  in  accordance  with  this  act  there 
shall  be  collected  a  fee-  of  30  centavos  for  each  thousand  cigars  or 
fraction  thereof  in  the  lot  offered  for  inspection ;  3  centavos  for  each 
thousand  cigarettes  or  fraction  thereof  in  the  lot  offered  for  inspec- 
tion; 25  centavos  for  each  100  kilograms  of  leaf  tobacco  or  frac- 


TOBACCO    INSPECTION   LAW.  115 

tion  thereof  in  the  lot  offered  for  inspection;  and  1  centavo  for 
each  kilogram  or  fraction  thereof  of  other  manufactured  tobacco  in 
the  lot  offered  for  inspection. 

SEC.  9.  The  collector  of  internal  revenue  may  appoint  inspectors 
of  tobacco  for  the  purpose  of  making  the  inspections  herein  required, 
or  may  detail  any  officer  or  employee  of  the  bureau  to  perform  such 
duty.  Said  inspectors  or  employees  shall  likewise  be  charged  with 
the  duty  of  grading  leaf  tobacco  and  shall  perform  such  other  duties 
as  may  be  required  of  them  in  the  promotion  of  the  Philippine  to- 
bacco industry.  The  collector  of  internal  revenue  shall  likewise 
appoint,  with  the  approval  of  the  secretary  of  finance  and  justice, 
not  exceeding  two  agents  in  the  United  States  for  the  purpose  of 
promoting  the  export  trade  in  tobacco  with  the  United  States,  whose 
duty  it  shall  be  to  inspect  shipments  of  tobacco  upon  or  after  their 
arrival  in  that  country  when  so  required,  to  assist  manufacturers  of, 
•exporters  of,  and  dealers  in  tobacco  in  disseminating  information 
regarding  Philippine  tobacco,  and,  at  the  request  of  the  parties,  to  act 
as  arbitrators  between  the  exporter  in  the  Philippine  Islands  and 
the  importer  in  the  United  States  whenever  a  dispute  arises  between 
them  as  to  the  quality,  sizes,  classes,  or  shapes  shipped  or  received. 
When  acting  as  arbitrator  as  aforesaid  the  agent  shall  proceed  in  ac- 
cordance with  the  law  governing  arbitration  and  award  in  the 
locality  where  the  dispute  arises.  All  agents,  inspectors,  and  em- 
ployees acting  under  and  by  virtue  of  this  act  shall  be  subject  to  all 
penal  provisions  applicable  to  internal-revenue  officers  generally. 

SEC.  10.  Whenever  cigars  and  cigarettes  bearing  the  standard  in- 
spection label  hereinbefore  required  shall  arrive  in  the  United  States 
in  a  worm-eaten,  musty,  or  moldy  condition,  or  shall  become  worm- 
•eaten  within  60  days  after  arrival,  the  United  States  agent  hereinbe- 
fore provided  for  shall  inspect  same  at  the  request  of  the  importer 
or  dealer  and  cause  them  to  be  reconditioned,  if  practicable;  if  not, 
and  the  importer  or  dealer  so  desires,  they  shall  be  returned  to  the 
Philippine  Islands.  Expenses  incurred  in  reconditioning  such  cigars 
in  the  United  States  or  in  transporting  them  back  to  the  Philippine 
Islands  from  the  place  to  which  consigned  when  they  left  the  Philip- 
pine Islands  shall  be  borne  by  the  insular  government. 

SEC.  11.  In  order  to  facilitate  the  free  entry  of  tobacco  products 
from  the  Philippine  Islands  into  the  United  States,  the  collector  of 
internal  revenue  is  authorized  to  act  as  stamp  agent  for  the  United 
States  Commissioner  of  Internal  Revenue,  and  to  certify  to  the  insu- 
lar collector  of  customs  that  the  standard  tobacco  exported  is  the 
growth  and  product  of  the  Philippine  Islands.  The  insular  col- 
lector of  customs,  upon  certificate  from  the  collector  of  internal 
revenue  as  aforesaid,  shall  issue  such  certificate  of  origin  as  may  be 
necessary  to  insure  the  speedy  admission  of  the  standard  tobacco  into 


116  INTERNAL   REVENUE   LAWS. 

the  .United  States  free  of  customs  duties.  No  such  certificate  shall 
be  issued  for  tobacco  which  has  not  been  inspected  and  labeled  as 
provided  in  this  act. 

SEC.  12.  The  inspection  fees  collected  by  virtue  of  the  provisions 
of  this  act  shall  constitute  a  special  fund  to  be  known  as  the  "  To- 
bacco inspection  fund,"  which  shall  be  expended  by  the  collector  of 
internal  revenue,  upon  allotment  by  the  secretary  of  finance  and  jus- 
tice, exclusively  for  the  following  purposes : 

(a)  The  payment  of  the  expenses  incident  to  the  enforcement  of 
this  act,  including  the  salaries  of  the  inspectors  and  agents, 

(6)  The  payment  of  expenses  incident  to  the  reconditioning  and 
returning  to  the  Philippine  Islands  of  damaged  tobacco  and  the  re- 
imbursement of  the  value  of  the  United  States  internal- revenue 
stamps  lost  thereby. 

(c)  The  advertising  of  Philippine  tobacco  products. 

(d)  The  establishment  of  tobacco  warehouses  in  the  Philippine 
Islands  and  in  the  United  States  at  such  points  as  the  trade  condi- 
tions may  demand. 

(e)  The  payment  of  bounties  to  encourage  the  production  of  leaf 
tobacco  of  high  quality. 

SEC.  13.  The  collector  of  internal  revenue  shall  be  the  executive 
officer  charged  with  the  enforcement  of  the  provisions  of  this  act  and 
of  the  regulations  issued  in  accordance  therewith,  but  it  shall  be  the 
duty  of  the  director  of  agriculture,  with  the  approval  of  the  secre- 
tary of  public  instruction,  to  execute  and  enforce  the  provisions 
hereof  referring  to  the  cultivation  of  tobacco. 

SEC.  14.  Any  person  who  shall  export  or  attempt  to  export  from 
the  Philippine  Islands  to  the  United  States  any  tobacco  that  does  not 
bear  the  inspection  label  hereinbefore  required,  and  any  person  who 
shall  knowingly  violate  an}^  other  provisions  of  this  act,  or  any  of  the 
rules  issued  by  the  collector  of  internal  revenue  in  accordance  with 
this  act,  shall  be  punished  by  a  fine  not  exceeding  500  pesos  or  by 
imprisonment  not  exceeding  six  months,  or  by  both  penalties,  in  the 
discretion  of  the  court. 

SEC.  15.  There  is  hereby  appropriated  out  of  any  funds  in  the 
insular  treasury  not  otherwise  appropriated  the  sum  of  15,000  pesos, 
which  sum  shall  be  made  a  part  of  the  tobacco-inspection  fund  here- 
inbefore created,  and  which  shall  be  expended  for  the  purposes  and 
in  the  manner  set  forth  for  the  expenditure  of  said  fund. 

SEC.  16.  This  act  shall  take  effect  upon  its  passage  :  Provided,  That 
any  penal  provisions  contained  herein  for  infractions  of  the  pro- 
visions of  this  act  or  of  the  regulations  prescribed  by  the  collector  of 
internal  revenue  shall  not  be  enforced  until  the  1st  day  of  July,  1916. 

Enacted  February  4, 1916. 

o 


10m-12,'23 


YC  356411 


464846 


UNIVERSITY  OF  CALIFORNIA  LIBRARY 


